On 27 September, just after Labour conference, the Labour Party announced that a Labour government will “scrap” Universal Credit and revise its current position of halting the roll-out.
The detail of the new policy is a series of important reforms.
“Reduce the five-week waiting period by introducing an interim payment after two weeks;
Scrap the two-child limit;
Scrap the benefit cap;
Immediately suspend sanctions and the claimant agreement;
Make split payments, payments direct to landlords, and fortnightly payments the default;
Officially end the ‘digital only’ approach by recruiting 5000 new social security advisers.”
As the Institute for Fiscal Studies (IFS) comments, these policies will significantly increase the incomes of some households, potentially by thousands of pounds a year. They are not exactly a “scrapping” of UC in the sense of a reversion to the “legacy” benefits pending reconstruction.
“The parts of the package... that would have the largest direct impacts on household incomes are in fact nothing to do with the universal credit reform per se.
“The two-child limit and overall benefits cap are benefit cuts that took effect under the old benefits system and are simply being carried over into universal credit. Irrespective of whether universal credit continues, those cuts could be maintained or reversed.”
The specific changes relating to UC like the initial payment being made quicker, making fortnightly payments the default rather than monthly, the housing component being paid direct to landlords, and splitting the bank accounts that the money can go to, are welcome.
The constitute a reworking of the idea of a simplified and integrated system of payments, rather than a return to the complexity of the “legacy” benefits.
Labour has summed it all up as a replacement of Universal Credit with a new system run by a Department for Social Security, which will replace the Department for Work and Pensions.
Labour leaders have given no timeline for the change. Since UC already has 2.4 million people enrolled, it has the potential to be vastly complicated. Month by month more people come off the legacy benefits, and have no obvious route back to them.
It will be important to press for the specific changes promised to be brought in quickly, rather than waiting for an entire reworking of the machinery to be completed.