UK government's universal credit dream turns to nightmare

Last February, when Leo Varadkar was still minister for social protection, he came to London to meet his British counterpart, Damian Green. The two men exchanged "general reflections on Brexit in relation to social security and employment issues", according to the department for work and pensions.

But Varadkar also wanted to hear from Green, who is now Theresa May’s de facto deputy prime minister, about the “UK experience with universal credit; automatic enrolment in occupational schemes; and, approach to disability benefits”. If the Taoiseach were to ask Green today about universal credit, he would learn that it has become, after Brexit, the Conservative government’s biggest headache.

All Britain’s political parties back the principle behind universal credit, which replaces six separate benefits, including jobseeker’s allowance, tax credits and housing benefit, with a single payment. It allows claimants to work temporarily or part-time without having to stop claiming a benefit and later re-apply. Instead, the universal payment is reduced in line with the number of hours the claimant works.

The government claims that universal credit helps people back into work as well as being more convenient for claimants, who now have to deal with only one agency. The new system has been rolled out gradually, and there are currently about 600,000 people who receive universal credit, a figure due to rise to about a million by the end of the year.

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Serious problems

During the course of the roll-out, however, serious problems have arisen, leaving many claimants destitute, in debt or facing eviction from their homes. universal credit is paid monthly and in arrears, so that claimants have to wait six weeks between receiving their last payment under the old system and their first under the new.

Housing benefit is no longer paid directly to landlords or local councils but is included in the monthly payment, so claimants must make the payment themselves. Claimants must apply for the new benefit online or call a helpline which charges 55p a minute (a charge the government will scrap from next month).

MPs from all sides accused the government of seeking to ignore parliament by treating it as little more than a debating chamber

Most of those claiming universal credit have no savings and little room for manoeuvre financially, so waiting six weeks for the first payment has caused great hardship. Those in need can apply for an advance payment but this is a loan that must be repaid within six months.

Many claimants are used to receiving benefits weekly, so the move to a monthly payment is difficult to manage and rent arrears have soared in areas where universal credit is paid. Earlier this year, the Trussell Trust, which runs food banks, reported that referrals for emergency food parcels were significantly higher in a universal credit area, at nearly 17 per cent, compared with the national average of just under 7 per cent.

"Universal credit is clearly designed by people who lack knowledge and experience of poverty and of what it is like to be an unemployed worker, and who have no experience of the full impact that this policy will have on claimants," said Labour MP Laura Pidcock.

On Wednesday night, MPs voted by 299 to zero in favour of a Labour opposition day motion calling on the government to halt the roll-out of universal credit across the country. Opposition day motions are non-binding but Conservative MPs were under a three-line whip to abstain because the government feared it could not win.

Parliamentary stratagem

The government used a similar approach last month when it declined to oppose Labour motions on NHS pay and student fees, which did not go to a vote. This time, however, Labour used a parliamentary stratagem to force a vote, providing tellers for both Yes and No.

Leader of the house Andrea Leadsom told the Commons on Thursday that the government would listen to members' concerns but would not halt the roll-out of universal credit. MPs from all sides accused the government of seeking to ignore parliament by treating it as little more than a debating chamber.

Conservative MP Edward Leigh had a warning for Leadsom, telling her that the government's behaviour this week could come back to haunt the Tories.

“It may be that in future we have a minority Labour government. They may produce a policy that we think is deeply contrary to our personal liberties. We may muster a majority in parliament against it. What happens if that future Labour government then say: ‘We’re sorry – you’ve set the precedent, this is only an expression of opinion, and we’re going to ignore parliament’? Frankly, the road to tyranny is paved with executives ignoring parliament,” he said.

“If we, as Conservatives, live by the sword now, our Conservative values might die by the sword in future.”