Work and Pensions Secretary Amber Rudd has announced further changes to the Government’s controversial Universal Credit scheme.
What is Universal Credit (UC)?
Originally introduced by the then work and pensions secretary Iain Duncan Smith under the former coalition government, UC was designed to simplify the welfare system by combining six working age benefits into a single payment.
A key element of the scheme was to embed the principle “work always pays”, with payments tapering off as claimants moved into work ending the sudden “cliff edge” loss of benefits once they started doing more than 16 hours a week.
Why has it proved so controversial?
Initially there was a broad welcome for the principles behind the scheme amid concern the welfare system had become hugely over-complicated and was leaving people trapped in poverty.
The plan was for it to be rolled out in stages across the country so that any difficulties could be ironed out before it went nationwide.
However, right from the start, it was beset by delays and problems as officials grappled with what was described as a “once in many generations” reform.
Those difficulties were exacerbated in 2015 when then chancellor George Osborne announced a £3.2 billion cut in the UC budget, causing critics to question whether its original purpose could ever be achieved.
What has been the impact on claimants?
One of the biggest complaints has been claimants who moved onto the new system had to wait six weeks (later reduced to five) for their first payments, driving low income families into debt.
Unlike the old system – when the housing benefit element of UC could be paid to landlords – UC was paid direct to claimants in order to encourage them to learn to budget.
However, the result has been that in some pilot areas, landlords simply refused to take UC claimants as tenants because of fears they would be unable to collect the rent.
Where does that leave UC?
In June 2018, the National Audit Office said UC was proving more expensive to administer than the six benefits it replaced, had caused hardship to claimants, and may never deliver value for money.
While the national roll-out was supposed to have been completed by the end of 2017, only around 10% of claimants had been moved onto the new system.
Ms Rudd has now pulled a planned Commons vote on the full roll-out and said she will be seeking only approval for the transfer of a further 10,000 claimants.
She insists, however, that she remains committed to completing the process by 2023.