Will Labour really ‘scrap’ Universal Credit?

A few days ago, Jeremy Corbyn announced that ‘Labour will scrap Universal Credit’ if they win the next general election. Calling it ‘inhumane and cruel, driving people into poverty and hardship’, Corbyn said he would ‘introduce an emergency package of reforms’. He promised to bring in a new system ‘based on the principles of dignity and respect’ as part of a new Department for Social Security.

So, it’s dramatic stuff. A total turnaround in the benefit system before the last major benefit reform is even a third of the way through rolling out. Some would say, before more damage is done to the many millions still due to go on to Universal Credit. Others would say, at what cost to the taxpayer? Of course, all of this is dependent on the Labour Party actually getting into power.

My question though is, what does ‘scrapping’ Universal Credit actually entail? How far will it be replaced or reformed if Corbyn gets his chance?

Changed but not replaced

If we look at the detail of what the Labour Party is proposing, it is certainly a radical change. Many aspects, particularly around the administration of Universal Credit, will be replaced. Universal Credit will not be abolished though, and many of the aspects of how entitlements are calculated have not been addressed.

As the proposal stands, people on benefits but not yet on Universal Credit will still move on to it in time, as will new benefit claimants. If nothing changes in the calculation, millions will still be worse off under the new system, most notably many disabled people and lone parents.

Most of the proposed changes are to processes, rather than entitlements. The changes that have been announced that affect how much money people get are only partly to do with Universal Credit. The removal of the rule limiting receipt of benefits to a maximum two children affects Child Benefit, Child Tax Credit and Housing Benefit as well as Universal Credit. It is a major change though, restoring the opportunity to claim benefits for families who have a third, fourth or subsequent child.

Likewise, the abolition of the overall benefit cap affects many different benefits, but Universal Credit is certainly one of them. At present it limits the total benefits that can be claimed by any one family to a maximum limit. It is mainly families with three or more children and/or those with high rents that are most affected by this policy. Some families lose very large sums of money through this rule, so this change will be very beneficial to them.

A new culture

Arguably the biggest changes proposed are all about putting a new culture in place for social security. Labour promises a system based on dignity, universalism and an end to poverty. They will approach this by transforming the payment system and the way claimants interact with the Jobcentre.

The first issue is to end the initial long wait for a first payment – currently at least five weeks. Under Labour’s plan, new claimants will be paid an interim payment two weeks after making a claim with the balance paid once the five weeks are up. Payments will continue on a monthly basis from then on, although plans are being worked on to make fortnightly payments the norm in the future. Splitting payments between members of a couple as a default will be widely welcomed, as will paying the housing element direct to the landlord.

These payment changes do raise some questions though. Will housing payments always be made to the landlord by default? This does not happen for private tenants on Housing Benefit now and many private tenants will not want their landlords to know anything about their claim. Also, with couples, what proportion will be split between them? Labour say the child element of Universal Credit will go to the primary carer of the child, but what about the rest? Will it be split in two? Will the couple decide who gets what or will the government?

Perhaps most significantly, Labour plans an eventual change to fortnightly payments. This means moving the assessment of Universal Credit from a monthly benefit to a weekly one. I’ve argued for this before, but it does mean huge new IT changes for the department. A big part of the intention for Universal Credit was to make changes in circumstances, automated. If your wages go up or down in a month, your benefit will follow it. This causes many issues for people whose wages don’t follow a predictable monthly pattern, so a change to this could be welcome. However, simply changing from a monthly pattern to a weekly one would mean your entitlements would be even more unpredictable if they changed every week. Addressing this automation is key to making this change work.

Finally, as part of the new culture, Labour would bring in 5,000 more social security advisers. This would help to deal with the issues people have with applying and managing their claim online. It also means more staff able to work with claimants to help them find employment, rather than policing their behaviour and sanctioning them if they fail to keep to their end of the bargain. A major piece of this announcement is the suspending of sanctions and the claimant commitment. This wording is surprising from Corbyn, as it is not the end of sanctions, merely the suspension. Also, the claimant commitment will be replaced by a new reciprocal agreement between the claimant and Jobcentre work coach. One that is tailored to them and helps them best to find work or training. This sounds a lot like how the claimant commitment is supposed to work already, although in practice it often falls far short.

What will the claimant be required to do then, under the reciprocal agreement, to claim Universal Credit? There are big questions here. Labour say, ‘The claimant will agree to search for suitable work and undertake training opportunities where appropriate’. Well, what if they don’t? If they refuse to agree to that, or if they agree but then don’t do it, what happens? It does not seem clear. Will this agreement be entirely voluntary or will some or all of the benefit be dependent on it? Housing Benefit and Child Tax Credit currently require no behavioural commitment. Will Universal Credit follow suit and allow anyone to claim it without agreeing to do anything in return, or will the suspension of the sanctions regime prove temporary?

Universal Credit is here to stay

So, this is all very big news and we can expect major changes to social security in the advent of a Labour government. We’ll await the detail on how they plan to implement the administrative changes proposed and we’ll have to see if anything more comes from them on restoring the entitlements of the many millions who are worse off under Universal Credit.

With appropriate planning, most of these proposals are welcome and should make claiming and receiving Universal Credit easier. We can now be sure though, that Universal Credit is here to stay as the central pillar of the benefits system. If changes this wide ranging don’t abolish it, we can expect it to last at least another ten years. It may even have finished rolling out by then.