What is changing?
The BBC reports that ministers are planning to slow the “managed migration” of 2 million working tax credit claimants on to universal credit. Leaked Whitehall papers suggest that a large-scale transfer of claimants to the new system will not happen until November 2020 – 15 months later than originally envisaged. The work and pensions minister, Alok Sharma, has confirmed a slower rollout. This delay would only apply to existing legacy benefit claimants; anyone making a new benefit claim in an area where universal credit is in place will move straight on to the system.
What is the problem with managed migration?
The move reflects ministerial alarm over the risk of political fallout from transferring working families on to a new benefit under which many will be financially worse off. The work and pensions secretary, Esther McVey, has admitted that some working families could lose £200 a month as a consequence. Charities have warned the migration process could push vulnerable people out of the benefits system and drive up reliance on food banks. Former prime ministers Gordon Brown and John Major have warned migration will backfire politically, even potentially fuelling poll-tax-style riots. Up to 30 Conservative backbenchers have made it clear they are unhappy and want changes to universal credit
Would this delay fix the issue?
It would body-swerve around an immediate political problem– a parliamentary vote on the regulations governing managed migration. These were expected to be laid out this month, and it was was likely the government would lose. A delay would effectively kick the vote down the road for a year, putting off a potential repeat of the successful tax credits rebellion in 2015. Opposition MPs have broadly welcomed a slower rollout, but pointed out it would not insulate new claimants from the miseries of universal credit.
Wasn’t universal credit supposed to be up and running by now?
The universal credit vision was unveiled by the then work and pensions secretary Iain Duncan Smith in 2010 with a view to it being fully in place by 2017. A litany of hitches and delays mean that the programme is now not expected to be fully complete until the end of 2023.
Hasn’t the government also introduced some technical fixes?
According to the BBC, there are plans to introduce a “run-on” of existing benefits for two weeks after a universal credit claim is made. This means that, in effect, the waiting time for a first benefit payment will be a minimum of three weeks – as opposed to the current five-week wait. This will be costly – hundreds of millions, says the BBC – but may well ease the harsh transition for claimants. However, this run-on will not apply to tax credit or child tax credit claimants. Ministers have refused to comment on these fixes, calling them rumours.
What about the help for self-employed universal credit claimants?
The BBC suggests ministers will move to ease the universal credit experience of self-employed claimants, such as seasonal workers, whose income can be volatile. MPs warned earlier this year that current universal credit rules risked “crushing” entrepreneurialism and leaving some self-employed people £3,000 a year worse off than people in regular employment doing the same job. Again, ministers have refused to comment on this.
Would these measures placate critics of universal credit?
They are likely to welcome the technical fixes, but for many the real prize is the restoration to universal credit of £2bn in work allowances stripped out by former chancellor George Osborne in 2015. Tory backbenchers and anti-poverty campaigners are lobbying hard on this issue ahead of the 29 October budget. Restoring the £2bn would make universal credit more generous and improve work incentives for claimants, but many design flaws would still remain.
What is the future for universal credit?
Despite some recent calls for it to be scrapped, most notably by the shadow chancellor, John McDonnell, it is not clear that any of the main political parties has the stomach to do this (or has worked out a plan B in any detail). The National Audit Office suggested earlier this year that universal credit was, in effect, too big to fail. Fixing it, however, is likely to be costly.