Two weeks ago, newspapers erupted in outrage, a minister looked set to resign and a flagship government policy was thrown into doubt. For two days pressure built as parliamentarians and columnists cried foul. Then, on the third day, the sixth of July, the cabinet met at Chequers. The outrage fell into the background. On the fifth day, the ninth of July, two ministers resigned. The outrage died a silent death.
The outrage was not about Brexit, but Universal Credit. Esther McVey, Secretary of State for Work and Pensions, was caught lying to parliament. Where a National Audit Office report (which can be viewed here) recommended a pause in Universal Credit rollout in order to assess capability, Esther McVey claimed it demanded a faster rollout. Where the same report questioned the gains from Universal Credit, Esther McVey proclaimed it a success. Yet, despite breaking the ministerial code, she did not resign.
The saga was quickly overshadowed by the curtains drawing on the next act of that dull tragedy: Brexit. This is a shame for two reasons. First, either a liar or an incompetent remains in the cabinet, showing that brazen disregard for professionalism is no bar to cabinet membership (as if Boris Johnson remaining Foreign Secretary for so long was not enough). Second, a rare opportunity to scrutinise a policy besides Brexit was lost. This is particularly shameful when the policy in question has been bungled from start to finish.
The start of Universal Credit (UC) was in 2010, under the coalition government. The goal was to cut costs and increase employment incentives. This was to be done by replacing six means-tested benefits with one payment. The government planned to invest £2.2 billion to transfer eight million households to UC by 2017. By 2013, however, the programme was failing. The government had an overly ambitious timescale, leading to an unfamiliar approach to project management and £34 million of IT write-offs. The project was reset. Since the reset, the government’s plans changed a further seven times. And the deadline to transfer all eight million households has been pushed back to 2023, with 815,000 claimants currently on UC.
Failures in implementation aside, the principles of UC seem sound. By rolling six benefits into one and creating a single claim, the policy should cut administrative costs while ensuring claimants do not miss benefits that they are eligible for. The single payment should also align more closely with pay cheques, preparing the unemployed for budgeting when in work. It is unsurprising then that, in principle, UC is supported by charities like the Joseph Rowntree Foundation and Citizens Advice. In practice, however, UC falls short of the promised cost-cutting, poverty-busting reform.
First, overreliance on a new administrative system has led to delayed or wrong payments. One in five claimants have not received their full payments on time. Delayed payments inevitably push vulnerable recipients into debt, especially as more than half of low and middle income households have no savings. In written testimony to the Work and Pensions Select Committee, the Joseph Rowntree Foundation offers story after story of recipients trapped in debt, stress and depression. For example, take the tale of a single, working mother forced from her job by the stress caused from the debt she accrued while waiting for her UC payments.
Add to the delays a six week wait for the first payment, and you get a host of indebted claimants falling further into poverty. In the government’s defence, an Advance Payments system has partly alleviated the issue. But, the Advance Payment covers only 50% of a monthly claim, so people are left unpaid for four of the six weeks. Small wonder that rent arrears have increased in areas under UC!
Second, the move to monthly payment has resulted in budget issues for vulnerable households. Families used to a series of different payments, often on a weekly basis, now have to plan their finances monthly. The shift inevitably causes difficulties. Food bank use has surged by 30% in areas covered by UC, according to the Trussell Trust. Of course, the short-term pains might be worth the long-term gain of aligning welfare payments with pay cheques, except that, while 75% of those in employment receive monthly pay cheques, the figure is 51% for those earning below £10,000 a year. Many claimants are financially suffering while their payments are aligned to a schedule which suits only a small majority.
Third, the new system of payments allows the government to cut benefits by stealth. Rolling six payments into one lets the government hide cuts in the new total. £3 billion in cuts are already planned to be levied through UC, leaving households £200 a month worse off, and it is not unlikely that more will be announced as the fiscal pressure from Brexit bites.
“There are three kinds of lies: lies, damned lies and statistics” Benjamin Disraeli infamously did not say. When the statistics are so clearly against her, it is any surprise that Esther McVey could only resort to the first two? Thank goodness then that Brexit so effectively hid her from facing the last kind! Had she done so, she would have been confronted with a policy that has failed to meet any of its goals. Increased costs; increased debt; increased rent arrears; increased usage of food banks; decreasing provision for the most vulnerable.
Instead, UC will continue unchallenged, plodding on, just like its dishonest minister. Which, after all, is the sad conclusion the National Audit Office came to. A policy where too much has been invested, too much changed to turn back now; consequences be damned! Remind you of anything?