Universal Credit: Who benefits from welfare reform?

Citizens Advice Bureau website Citizens Advice Bureau bosses are worried about the workings of the new universal credit

Successive governments have talked about reforming the benefits system and ending the culture of welfare dependency.

The Labour government ran into trouble over lone parents' and disabled people's benefits. I remember talking to an employment secretary in the Blair government while the debate was raging over their "Welfare to Work" programme.

"It's just so complicated," he told me, "fraught with unintended consequences. It's like one of those jigsaw puzzles where whenever you put one piece in place, another one pops out."

But there is general agreement that the evolution of our system of benefits, allowances and tax credits under governments of one shade and then another has become increasingly piecemeal and haphazard, resulting in the chaotic tangle we have today.

That is why ministers want to simplify and rationalise it.

The 'Big Idea'

Their 'Big Idea' is the Universal Credit into which a range of benefits are being subsumed. Housing benefit, for example, will become just one of its major elements.

It is part of the Government's radical reorganisation which is about to come into effect.

And of course, it's not just about streamlining. Inevitably, in these straitened times, it is also about cutting costs.

"And so it should be", according to most people surveyed in recent opinion polls.

Ministers tell us the cost to the public purse of housing benefit alone has doubled over the past decade. Benefits and tax credits account for by far the biggest single chunk of all the UK's public spending - £230bn out of £709bn.

The government assures us that making savings is only part of the story.

It also wants to target help where it can do most good. So alongside the introduction of a benefits cap, the disability living allowance morphs into the personal independence payment which will continue to rise year-on-year for the remainder of this parliament. Some existing 'in work' benefits are also due to be up-rated.

This is the vision the coalition hopes we will buy into.

But the controversy raging around it continues to develop. Over the past few days we have heard warnings of grave hardship and deprivation from organisations as diverse as the Child Poverty Action Group, the National Housing Federation and the Citizens Advice Bureau. Church leaders have also made their feelings known.

Start Quote

Ministers simply do not know what impact their housing benefit changes will have”

End Quote Liam Byrne Shadow Work and Pensions Secretary

But it is from pressure groups and campaigning organisations that the most outspoken opposition is coming.

Labour leaders clearly sense they have to tread carefully. Partly because of the party's own record while in office, partly because they do not want to find themselves on the wrong side of public opinion, and not least because it is becoming increasingly clear that whoever forms a government after the next election will have to continue implementing the general austerity drive for years to come.

Though some in Labour's ranks are agitating for a more aggressive approach, the prevailing line of attack against the government appears to be less about welfare reform in principle and more about whether or not the measures are being implemented intelligently, fairly or competently.

Take for example the debate surrounding what Labour call the 'bedroom tax' which they say penalises some of the most vulnerable claimants. Labour's view is that it is a policy which is simply ill thought out.

For the record, ministers counter that it is a benefit not a tax. They would rather we call it a 'spare room allowance' and point to the widespread issue of under-occupation while so many people have no bedroom of their own.

Shropshire pilot

When the Shadow Work and Pensions Secretary, Liam Byrne, the Labour MP for Birmingham Hodge Hill intervened in the debate this week, it was significant he again berated the government over how it was implementing the changes, not over whether they were right or wrong.

"Under this government," he said, "the Department for Work and Pensions hasn't got the first idea what it is doing. Ministers simply do not know what impact their housing benefit changes will have."

Shropshire is one of the areas chosen by the government to pilot some of the most radical features of the new system. In this case, the council tested the system through which housing benefits will be paid directly to many of the claimants, except for the most vulnerable including the elderly or those with disabilities.

The council told the BBC's Sunday Politics Midlands programme recently that the project had been extraordinarily hard work. Social landlords in the area were worried that paying benefits direct to claimants rather than to their landlords could put their income streams at risk which in turn could undermine their efforts to invest in new affordable housing.

Ministers, for their part, argue that direct payments encourage claimants to develop a responsible approach to the management of money and so equip them better for the world of work.

We are about to discover who is right and who benefits. At a time when money is so tight for government, claimants and taxpayers alike, the stakes could not be much higher.

Patrick Burns Article written by Patrick Burns Patrick Burns Political editor, Midlands

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  • rate this

    Comment number 52.

    ...and made to feel like there's not enough to go around. It makes me sick! the way i feel is what caused the 2011 riots. it's called oppression. Most others feel this way but don't know why. It's cuz our chains are not on our arms but on paper. I saw the London riots coming and I'm telling you that that was just a tremor before the quake... it will happen again when times get hard enough.

  • rate this

    Comment number 51.

    ...with industry. if they don't want to do that they should make it possible to opt out of the free services and not be taxed, be independent of the government. the fact is that no matter how much paper someone has the rich are only rich if the poor are poor and the more people who are poor the richer the rich are. we are harvested like cattle for tax and labor. condensed into built up areas

  • rate this

    Comment number 50.

    When we're taxed we do work that we don't get paid for. this would be fine if we had a choice an wanted to benefit from the services that make tax necessary! We are forced by the government to work an about a quarter of that work we don't get paid for. being forced to work without pay is called slavery which is illegal. the government should do what they tell us to do. Get up an support themselves

  • rate this

    Comment number 49.

    The only people who will benefit from this & future 'Welfare Reforms' are the rich who whose tax cuts the reductions in benefits will fund.

    The Tories & especially IDS are morally bankrupt, as opposed to financial bankruptcy, which they would experience if they suddenly had to survive on almost nothing.

    IDS is monstrous hypocrate couldn't survive on £53/Day, let alone live on it for a week!

  • rate this

    Comment number 48.

    We do not have enough smaller social housing properties, or jobs for UK workers. As the latest census tells us one in seven people currently in Britain was born abroad, and 55% of immigrants last year were from outside the EU, and one in five immigrants into the EU end up in Britain, is it not time we get other EU countries to take an equal share of this burden? Surely this affects housing?

  • rate this

    Comment number 47.

    Please stop referring to cost saving as reform. I have no objection to change or making things 'better' or 'fairer', but please don't insult me by saying that they are 'fairer' or 'better' just because they are cheaper.
    Have the conviction to say we don't believe in XYZ so are not going to pay for it. Claiming to have made it better is just an insult!

  • rate this

    Comment number 46.

    29th March 2013 - 9:22

    Just a word about state pension...
    ...It's a myth that we had it all and are now a burden.
    And we do still pay taxes, same as everybody else.

    I take it VAT is the main tax. the same tax that benefit claimants pay on gas, electric, clothes, food, petrol. we all pay tax and bugger what the politicians have to say about it cos they claim it back

  • rate this

    Comment number 45.

    i won't benefit for sure, i haven't eaten in 2 days, i have no electric, was told last week to make a crisis loan claim so i can get some money until my claim is processed.Crisis loans have been abolished, would have been nice to know this as i was depending on the money to feed myself..i have no options, don't know where to turn, im hungry, so i reckon my only option is to go shoplifting for food

  • rate this

    Comment number 44.

    EMPLOYERS benefit from billions paid as an employment subsidy, working tax credits. They also benefit because people are being forced to accept underpaid work. If the Gov seriously wanted to reduce costs in this area they would increase the min wage to a rate that lifts people out of benefits. They won't do this because it would mean taking on a section of our community that can fight back.

  • rate this

    Comment number 43.

    @41 Keith

    Most social housing tenants are not allowed to take in lodgers under the terms of their rental agreement, this could have been changed to alleviate under occupancy, which is supposed to be the governments intention, but they have instead decided through financial pressure to force people to move or face living in poverty or worse. Single bed social properties are extremely hard to find.

  • rate this

    Comment number 42.

    when the conservatives came up with the phrase make work pay, I thought at last a government who is going to pay a fair living wage to all families who work, wow I didn't realise they ment making people out of work worse off than the law says they should have to make it look like work pays. pay a living wage, make buying your own place a realistic goal for every worker. a real incentive then.

  • rate this

    Comment number 41.

    The rising cost of Housing Benefit appears to be the result of a shortage of affordable rental accommodation. This is inexcusable and I'm skeptical that the 'bedroom tax' will encourage people to take in a lodger. We need more mobility among those on benefits - economic migration should not be limited to eastern Europeans and those in work.

  • rate this

    Comment number 40.

    Some people on benefits are criticised for going to expensive local shops rather than cheaper, further away supermarkets. This is of course valid in a monetary sense. However these more expensive local shops form part of the community and support network, sometimes being the only social contact that older people and some young Mums have, giving them an important yet less easily quantifiable value.

  • rate this

    Comment number 39.

    My cousin who has asperges syndrome and lives by himself will now be £13 a week worse off as he has to pay rates for the first time in his life. He now has very little money to pay for his food, electricity etc. He does not drink, smoke etc. He has no investments no mortgage and did not cause the financial crisis why is he receiving less support when a millionaire is receiving more?

  • rate this

    Comment number 38.

    So, this is my question to David Cameron. INSTEAD OF POTRAING PEOPLE WHO DEPEND ON BENEFIT HANDOUTS FOR SURVIVAL AS LAZY WHY DON'T YOU FIX THE ECONOMY AND CREATE JOBS FOR THEM? This government has adopted the rhetoric of being tough on benefits claimants and wants to get them back to work, but where are the jobs?

  • rate this

    Comment number 37.

    Cuts in one area transfer the problem to another area often at greater expense. This will save little money and create huge problems and uncertainty for those affected.
    If the Tories want genuinely to help people, they need to create a growing economy. There seems no sign of them wanting to do either.

  • rate this

    Comment number 36.

    I can tell you who will NOT benefit from the changes: the people who have been forced into poverty by government mismanagement of the economy & their failure to meet their duty of care to ordinary citizens!

  • rate this

    Comment number 35.

    The real time analysis is bound to fail, can't see any system coping with that amount of data. Alot of employers are not aware of the new system, so see alot of wtc being wrongly calculated. Just feel its another wheeze for the Torys chums to make money at the taxpayers expense. !!!

  • rate this

    Comment number 34.

    There is an old song that sums up the "nasty" sorry,Tory party and its latest attack on the working class and even more despicable, there unflinching assault on the very poorest in our society. The song goes like this "its the same the old world over it's the poor wot gets the blame and it's the rich that's gets pleasure and it's always been the same" Quite apt for this lot me thinks!

  • rate this

    Comment number 33.

    Universal credit system is married to new, government controlled, IT. As such it is doomed to fail from the start, as NO government IT system has ever worked. Law courts to post office and through to the dire and incredibly expensive failure the new NHS IT system.

    Universal credits, a sound idea, but will end up costing more due to IT failures and will not be fit for purpose as a consequence.


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