Labour leader Jeremy Corbyn suggests he could scrap hated 'streamlined' benefits system if voted into power.
Progressive bodies from unions to thinktanks across the UK have broadly welcomed the announcement that Labour would reform Universal Credit — although most agree that how this is done is critical.
Mark Serwotka, general secretary at civil and public servants’ union PCS, agreed that Universal Credit (UC) has been “an unmitigated disaster”.
“It’s great news that a future Labour government will radically overhaul the social security system, scrap UC, and create 5000 new jobs in a new Social Security department,” he said.
Serwotka said his members had done their best to try and make UC work for claimants, but the system needs investment and radical reform — which is something PCS has long called for.
“We look forward to working with a future Labour government to create a social security system that is humane, well staffed and that stops seeing claimants as a burden on society,” he said.
Unite, Britain and Ireland’s largest union, also welcomed the announcement, describing the current system as “cruel and miserable”. Liane Groves, head of community at Unite, said that although UC is meant to streamline the system, combining six welfare payments into one, the introduction was inherently flawed.
“It makes people wait five weeks without any money coming in. People, desperate to put food on the table and keep a roof over their heads, are plunged into a sea of debt from which they can never escape. This state-sponsored despair must cease,” Groves said.
“For tens of thousands, their lives have been made a misery by Tory ministers hell-bent on their austerity agenda, whatever the human cost.”
UC’s results have been highly publicised: long delays to claims pushing more people to use food banks, contributing to unacceptable levels of stress for claimants — in some cases allegedly leading even to suicide.
Unite has been campaigning for the reform of the system since its inception but given its manifold problems and the human suffering had already switched to calling for its end, the union indicated in a press statement.
A future system, according to Groves, should be based on principles of social justice, with the objective of ending poverty. First steps should give relief to those struggling with a new government committing to replacing UC as soon as it takes power.
Full details of what an incoming Labour government would do are yet to be made available beyond Corbyn’s “emergency reforms” ahead of any total replacement, however.
Economic analysis flags up need for detail
The Institute of Fiscal Studies (IFS) also reacted swiftly to the announcement, with researchers Robert Joyce and Tom Waters shining a microscope on the detail so far, likely benefits and overall costs.
They said that indicated reforms could, compared to current policy plans, top up the incomes of many low-income households – in some cases by £1,000s per year.
“They do not, however, amount to anything close to a scrapping of UC. If that is ultimately the intention, we have yet to hear anything about what that would mean,” the economists wrote.
“The part of the package announced 28 September that would have the largest direct impacts on household incomes are in fact nothing to do with UC reform, per se.
“The two-child limit and overall benefits cap are benefit cuts that took effect under the old benefits system and are simply being carried over into UC. Irrespective of whether UC continues, those cuts could be maintained or reversed.”
Joyce and Waters said that reversing the two-child limit in means-tested benefits would make about 700,000 households with children better off in the long run, by about £3,000 per year. This implied a cost of about £2bn per year.
“This is not to say that all those households would ‘immediately’ benefit. It is a cut that is being phased in gradually as families have additional children,” they said.
Abolishing the benefits cap would give about 100,000 working-age families an extra £2,000 a year on average. The main winners would be people with several children, high housing costs, or both. Cost ? About £200 million a year.
Labour also promised an extra payment at the start of people’s UC claims and a switch to fortnightly rather than monthly payments, targeting payment delays. Rents would be paid directly to landlords, and couple payments split between partners.
“These would make a real difference to some families. Nevertheless, while they constitute potentially important tweaks to the system, they are nothing remotely akin to scrapping it,” said Joyce and Waters.
If a Labour government were truly to redesign working-age means-tested benefits, there are many ways to do it and the detail is crucial. In any case, the “upheaval” would be “huge”, with 2.4 million UC claimants potentially affected, according to Joyce and Waters.
“There remain good reasons to want a more integrated benefits system to replace the complex, confusing and disjointed patchwork of support that we have had until now,” according to the IFS statement.
Progressive thinktank the Institute for Public Policy Research (IPPR) also welcomed the announcement. Clare McNeil, associate director at IPPR, confirmed that levels of trust in UC are “dangerously low in many communities”.
“It urgently needs a fundamental re-engineering because some of the design principles are profoundly misconceived,” McNeil said, adding that reducing wait times and offering flexibility over payment frequency and how payments are split within a household would be positive moves.
IPPR also welcomed the proposed removal of the two-child limit and benefits cap which had pushed children and disabled people further into poverty, destitution and debt.
“The benefits freeze has also had a disastrous impact,” McNeil said. “Any government should increase the UC Standard Allowance and reform the system for single parents and second earners in couples (often women) who have missed out because of the gender-blind design of the system.”
In addition, work should genuinely pay — and this meant working with employers to create “better” jobs and alternatives in places with few jobs available as well as actions like improving childcare, McNeil said.
IPPR research for an upcoming report suggested UC is failing to meet its stated aims while other figures show poverty is growing again among pensioners, children and workers. UC had been officially intended to boost workforce participation. However, it is “far from clear” that this has happened, according to the thinktank.
IPPR analysis for the Child Poverty Action Group in June found that lifting the two-child limit could raise 300,000 children out of poverty by 2023-24.
Fleur Doidge is a freelance journalist at Left Foot Forward. Follow her on Twitter.
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