Universal Credit needs £2 billion more to succeed, says Iain Duncan Smith

Universal Credit needs £2 billion more to succeed, says Iain Duncan Smith

Thursday, October 11, 2018

The architect of Universal Credit has said the Government’s welfare reform needs an additional £2 billion to work as planned.

Iain Duncan Smith, who quit as Work and Pensions Secretary in protest at cuts to Universal Credit funding, was speaking as former Prime Minister Sir John Major called for a rethink of the national roll out of the system.

Sir John said that most people will regard Universal Credit as unfair and warned that failure to protect those who lose out could trigger "the sort of problems that the Conservative Party ran into with the poll tax".

Labour is calling for the new benefit to be scrapped.

A senior party spokesman said: "This is a system that is not delivering, that isn't working and needs to be scrapped.

"That's why we're committed to a review of the whole of its performance and what should replace it."

But Prime Minister Theresa May told the House of Commons on Wednesday that transitional protections introduced by the Government would ensure that none of those moved on to Universal Credit would see any reduction in income.

Sir John told the BBC that Universal Credit was "impeccable" and "entirely logical" in theory, but called for its implementation to be reconsidered.

"In order to introduce something like Universal Credit you need to look at those people who in the short term are going to lose, and protect them, or you will run into the sort of problems the Conservative Party ran into in the late 1980s," he told the BBC.

"I don't oppose the principle of Universal Credit, I think there is a real danger that it will be introduced too soon and in the wrong circumstances."


'£2 billion that was taken out'

Then Work and Pensions Secretary Iain Duncan Smith at a cabinet committee meeting in September 2014

Mr Duncan Smith said that the Universal Credit roll out was "functioning very well", with tens of thousands of people finding it to be a better benefit than those it replaces.

But he told BBC Radio 4's Today programme that the money removed from its budget in 2016 should be restored: "We should direct the money back into Universal Credit exactly as it was originally planned to be rolled out."

Asked how much more needed to go in to the system, he replied: "The reality is the £2 billion that was taken out."

DWP figures released earlier this year showed that 29% of Universal Credit claims were closed and not paid, the majority of them because of failure to attend a first or subsequent interview (14%), failure to sign a claimant commitment (6%) or withdrawal of the claim (4%).

If these rates were repeated in next year's rollout, 580,000 claims could result in no payments.

Geoff Fimister of the Disability Benefits Consortium told HuffPost: "The DWP needs to find out what are the obstacles that are derailing these claims.

"Why are people missing meetings, not accepting 'claimant commitments' or just giving up?"


'An out-of-date, complex benefits system' 

A DWP spokesman said in response: "Universal Credit replaces an out-of-date, complex benefits system and the vast majority of Universal Credit claimants are paid in full and on time.

"There are a number of reasons why someone might close their claim, including securing a higher-paid job which exceeds the earnings threshold for Universal Credit."

Sir John became prime minister in November 1990 - nine months after rioting broke out in London linked to Margaret Thatcher's doomed poll tax reforms.

He denied he was predicting civil unrest, but warned that the Government could face political difficulties of a similar nature over Universal Credit.

"If you have people who face that degree of loss, that is not something the majority of the British population would think of as fair, and if people think you have removed yourself from fairness then you are in deep political trouble," he said.

But a Government spokesman said: "Universal Credit is based on the sound principles that work should always pay and those who need support receive it.

"We are listening to concerns about achieving these principles, improving the benefit, and targeting support to the most vulnerable - including for around one million disabled people who will receive a higher award under Universal Credit.

"This is a far cry from the confusing, unreliable legacy system that failed to pay claimants their full entitlements and consigned people to a lifetime on benefits."

Downing Street said £3 billion worth of transitional protections was being put into the system to help people being moved over.

The Prime Minister's official spokesman said: "The PM was clear yesterday that we are listening to concerns, that we are taking a test and learn approach to Universal Credit and improving the system as we roll it out."