Features

Scrapheap beckons for Universal Credit

Tories’ big welfare reform is set to be ditched. Matthew Partridge reports.

918-McVey-634

"It's rare that a government pauses the implementation of a flagship policy," says Isabel Hardman in The Spectator. "There's so much ego involved in these matters that to do so is to admit a failing."

But in the case of Universal Credit (UC) the Tories' plan to merge six existing benefits into a single payment the government has been forced to delay plans to roll out the new system to more claimants as fears grow across Parliament "that those who are already receiving the benefit are severely struggling".

Subscribe to MoneyWeek

Become a smarter, better informed investor with MoneyWeek.

Good in theory, bad in practice

The idea behind combining a number of different working-age benefits into a new single credit is "basically sound", says the Financial Times. Sadly, the rollout of UC has been a "shambles".All eight million Britons receiving benefits were due to be moved onto UC by October last year. Later, the target for completing reforms was moved to 2022. Now even that is regarded as ambitious.

What's more, it's becoming clearer that the scheme "is also a front for deeper benefit cuts". Esther McVey, the work and pensions minister, admitted last week that millions of families could be up to £200 a month worse off when the roll-out is complete. No wonder former prime minister John Major has "bluntly warned" that pushing ahead "could lead to a repeat of the poll tax debacle of the early 1990s, which saw riots against the Conservative government".

Advertisement
Advertisement - Article continues below

The evidence of impending disaster has led Iain Duncan Smith, the former Tory leader who came up with the idea of UC, to call for a further £2bn to be pumped in to save it. Yet "the chances of universal credit working well with more money are slim", says Phillip Collins in The Times. Its proponents should have been aware similar schemes have been considered several times by previous governments and rejected as immensely complex to implement.

On the other hand, "the chances of it working without are zero". So given the prime minister is unwilling to put more money into it, logic suggests the best option is "to take the pain of the sunk cost and lost time and send the scheme for scrap". But despite the recent concessions, "there is no sign of the government preparing to change course".

Burning down the government

That could be an expensive mistake for the Tories, as they battle to overcome the perception they are "a party of rich people that governs for other rich people, and neither understands nor cares about the poor", says James Kirkup in The Daily Telegraph.

Arguing about whether UC "is a good idea being implemented poorly overlooks some very deliberate choices ministers made to make the scheme worse", such as cuts former chancellor George Osborne made to the amount that claimants can earn before they start losing benefits. Despite her recent talk of "an end to austerity", Theresa May "has stood by that cut". If UC "does burn her government down", May "should remember she had the chance to douse the flames".

Advertisement

Recommended

Visit/519858/how-long-can-the-good-times-roll
Economy

How long can the good times roll?

Despite all the doom and gloom that has dominated our headlines for most of 2019, Britain and most of the rest of the developing world is currently en…
19 Dec 2019
Visit/516758/beyond-the-brexit-talk-the-british-economy-isnt-doing-too-badly
Economy

Beyond the Brexit talk, the British economy isn’t doing too badly

The political Brexit pantomime aside, Britain is in pretty good shape. With near-record employment, strong wage growth and modest inflation, there is …
17 Oct 2019
Visit/economy/people/600864/rishi-sunak-the-maharaja-of-the-yorkshire-dales
People

Rishi Sunak: the maharaja of the Yorkshire Dales

Rishi Sunak is taking the reins of the world’s fifth-largest economy at a crucial juncture. The unflashy but likeable youngster may be just the man fo…
20 Feb 2020
Visit/economy/uk-economy/600857/what-is-britains-new-economic-policy
UK Economy

What is Britain’s new economic policy?

At the moment, Britain doesn’t seem to have an economic policy. But radical-seeming announcements and the surprise ousting of the chancellor portend m…
20 Feb 2020

Most Popular

Visit/investments/stockmarkets/600909/will-coronavirus-kill-off-the-bull-market
Stockmarkets

Will coronavirus kill off the bull market?

It seems clear now the coronavirus will at some point go global. And when it does, will it bring down the stockmarket’s bull market? John Stepek looks…
27 Feb 2020
Visit/investments/commodities/gold/600887/gold-price-coronavirus-cost-of-face-masks
Gold

Gold, coronavirus, and the high cost of face masks in northern Italy

The price of gold is spiking – as it always does in a global panic. But this bull market predates the coronavirus epidemic, says Dominic Frisby, and w…
26 Feb 2020
Visit/personal-finance/pensions/pension-tax/600877/why-it-makes-sense-to-scrap-higher-rate-pensions-tax
Pension tax

Why it makes sense to scrap higher-rate pensions tax relief

The point of pensions tax relief is to keep you out of the means-tested benefits system. The current system is ridiculously generous, says Merryn Some…
24 Feb 2020
Visit/investments/commodities/600729/the-rare-earth-metal-that-wont-be-a-secret-for-long
Sponsored

The rare earth metal that won't be a secret for long

SPONSORED CONTENT – You can’t keep a good thing hidden forever; now is the time to consider Pensana Rare Earths and the rare earth metals NdPr.
31 Jan 2020