Ministers have gone back to the drawing board in an effort to make their flagship welfare benefits scheme more acceptable to MPs and better able to deliver payments and work incentives to claimants.

Amid warnings from ex-Prime Ministers and facing a widespread rebellion among its own backbenchers, the Government decided it needs to make some important concessions to get Universal Credit back on track. Reports of strong disagreements between the Treasury and the Department for Work and Pensions (who are in charge of UC) did not bode well. But the high cost of changes could limit the extent of changes made in the Budget. First introduced to the north west of England in 2013, the rollout of UC will be slowed again (it is already several years behind its original schedule) while efforts are made to tweak it further so that 2.6m families ‘in need’ do not suffer the £2,400 a year cuts in their benefits that was being projected. In reality the impact of proposals could be even worse than this as the Child Poverty Action Group has calculated that 4.3m families and close to 10m people (mostly children), will lose money. UC merges six benefits into a single payment but it has been beset by IT delays, complexities, processing problems and cuts in payments to claimants. It was due to be fully in place by 2017 but problems and delays mean that the programme is now not expected to be fully complete until the end of 2023. Social and private landlords have long complained about UC saying it has pushed up levels of poverty and rent arrears, with charities blaming the new benefit system for higher levels of evictions and homelessness. In areas where UC has already been introduced, landlords can point to much higher levels of rent arrears than previously.

Warnings

Sir John Major warned the Government that UC is becoming its very own poll tax from the 1980s, while Gordon Brown urged the Government to halt the roll-out of UC to prevent a period of discontent, chaos and riots. Conservative and Labour MPs lined up with the RLA in an unlikely alliance to condemn the scheme, while in a House of Commons debate Frank Field claimed that some of his constituents were being driven into prostitution by problems with late payments and how the scheme is working. With Esther McVey, the DWP Secretary of State and Theresa May contradicting each other in the Commons on the likely impact of future cuts on benefit claimants, it was perhaps inevitable that Ministers would call ‘a pause’ to the roll-out. Eventually Iain Duncan Smith, the former DWP Secretary and architect of the UC scheme was wheeled out to tour TV and radio studios claiming the system was working well and that thousands of people would find themselves better off in work. However, he did admit there was a problem as a result of £2bn of work allowances being taken out of payments in 2015 by the former chancellor George Osbourne. These have never been replaced and further cuts have since been implemented. “We should direct the money back into universal credit exactly as it was originally planned to be rolled out,” he said. “The reality is that £2bn was taken out.” Leaked Whitehall papers now suggest that a large-scale transfer of existing claimants to the new system will not happen until November 2020, some 15 months later than originally envisaged. The Work and Pensions Minister, Alok Sharma, confirmed a slower rollout in interviews he gave to BBC news. Other changes could see some existing legacy benefit payments continue to be made until a claim for UC is processed and a lower cap is imposed on how much money can clawed back from claimants for ‘in advance’ payments.

By Patrick Mooney, editor