Improve Universal Credit in Budget by reversing George Osborne's cuts, says thinktank

Improve Universal Credit in Budget by reversing George Osborne's cuts, says thinktank

Monday, October 29, 2018

The social policy thinktank the Joseph Rowntree Foundation has released its recommendations for how the Universal Credit system could be improved, including increasing the work allowance and reducing the amount that can be taken for debt repayments.

Work and Pensions Secretary Esther McVey confirmed that some people would be worse off under Universal Credit, but declined to confirm or deny reports she had told Cabinet colleagues that some claimants would lose out to the tune of £200 a month.

There have been calls from Gordon Brown and Vince Cable to halt the rollout of Universal Credit, which will replace six benefits and is being implemented in stages across the country.

The Joseph Rowntree Foundation (JRF) has released a number of suggestions as to how the system could be reformed.


Reversing the cuts

The JRF has calculated that restoring the work allowance - which is the amount you can earn before Universal Credit payments begin to reduce - to its original level would cost £2 billion if it were raised for parents only, and £3.4 billion if it were raised for everyone.

Under Iain Duncan Smith’s original 2009 plan, people on Universal Credit could keep 45p of every extra pound they earned over the threshold. George Osborne cut this to 35p in the 2016 Budget, and faced criticism at the time from charities and campaigners.

The amount people can receive in benefits has been frozen since 2016, with the government committing to a four-year freeze. The JRF advocates lifting this freeze early so benefits can rise in line with the cost of living.

It also suggests a more frequent payment schedule rather than the five weeks that’s currently in place, which has been shown to leave some people in rent arrears as they await payments.

The JRF also recommends lowering the amount of Universal Credit that can be taken for debt repayments. At present, 40% of income can be recovered for debts.


'Burning injustice'

The Foundation says fixing “design flaws” in the Universal Credit system will be more effective than raising the living wage or increasing the personal tax allowance.

Katie Schmuecker, head of policy and partnerships at the JRF, said: “In-work poverty is a burning injustice of our time.

“Universal Credit is a major reform to benefits for working age people that can help loosen the grip of poverty, but it’s in the news almost daily for all the wrong reasons.

“The government needs to use the Budget to get on the front foot and reform Universal Credit so it becomes a platform from which people can build a better life.”