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How George Osborne learned to relax and start loving Universal Credit

The Chancellor is using the reform as a trojan horse for benefit cuts, says Emily Thornberry. 

Remember Universal Credit? You know, “the most radical overhaul of our welfare system since its inception”? The “once in a generation reform” that was going to “improve the lives of millions”?

Yes, some truly ridiculous things have been said about Universal Credit over the years, mostly by Tory ministers. On the more realistic end of the spectrum, my predecessor Stephen Timms once pointed out, with admirable restraint, that the government was “in danger of overselling the benefits of Universal Credit.

I cannot think of a more egregious example in recent years of a policy which promised so much and delivered so little. 

It isn’t just the endless delays, computer crashes, “resets” and inter-departmental squabbling that have conspired to bring about the failure of this flagship Tory welfare reform.

Far more important is the fact that, almost without being noticed, the Tories have been hacking away at Universal Credit to the point where become almost unrecognisable.

The reasons for this aren’t hard to fathom. The comprehensive mauling the programme received following the general election had the Chancellor’s grubby fingerprints all over it.

For all the flaws in its implementation, Universal Credit was actually a perfectly good idea, at least in theory. By bringing a number of benefits and tax credits together into a single monthly payment, which was available to those in work as well as out and would be gradually withdrawn as earnings increased, the government was working to the fundamental principle that work should always pay – and be seen to pay.

This principle, which used to be shared by all parties, was even built into the design of Universal Credit. This worked by setting a minimum amount that each household could earn – a “work allowance” – before their benefits would start to be taken away.

That sounded perfectly sensible, and it was.

But last summer Universal Credit ran into serious trouble, as George Osborne was flailing around in search of a spare £12 billion. That, of course, was the amount that the Tories had promised to save from the welfare budget before the election, despite the fact that none of them seemed ever to have got as far as thinking about where they might actually find it.

The truth is that benefits system has never been as generous as the deplorable stereotypes of right wing tabloids and shows like Benefits Street tend to suggest. So in terms of the sheer scale of the cuts the Government was proposing, there just weren’t that many places within the welfare budget to look. Tax credits was one – and we all know how that turned out – and Universal Credit was the other.

But while tax credits threatened to ignite a political row approaching the scale of Thatcher’s infamous poll tax, Osborne himself has pointed out that he managed to make equivalent cuts to Universal Credit, saving around £3 billion, just a few weeks later.

He did this by exploiting an obscure loophole in parliamentary procedure, which Governments sometimes use to pass controversial legislation without the need for a vote, almost no-one outside Westminster batted an eyelid.  

Shortly after that, Iain Duncan Smith announced that the government is now tripping over itself to see that Universal Credit is rolled out nationally from April next year That’s just around the time, remember, that those now-abandoned cuts to tax credits had been due to kick in.

This is of course no coincidence. It is becoming increasingly clear that cutting tax credits and cutting Universal Credit is effectively the same thing. They hit the same families in the same way – the only difference is in the timing.

Following the government’s Spending Review in November, a leading think tank pointed out that for the first time, “Universal Credit is now squarely a welfare reform which saves money”. And that money has to come from somewhere.

According to the IFS, that somewhere is the pockets of 2.6 million low-income working households, who stand to lose an average of £1,600 a year with the transition to Universal Credit.

The government insists that most of this process will be complete by the time of the next election. And while there may yet be further delays, that seems far less likely now that the Chancellor is a convert to the cause.

Whenever Universal Credit does arrive, one thing’s for certain – it won’t be the same Universal Credit we were promised back when it was introduced with all that high-falutin rhetoric.  

Emily Thornberry is MP for Islington South & Finsbury and shadow secretary of state for foreign and commonwealth affairs.

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How Theresa May laid a trap for herself on the immigration target

When Home Secretary, she insisted on keeping foreign students in the figures – causing a headache for herself today.

When Home Secretary, Theresa May insisted that foreign students should continue to be counted in the overall immigration figures. Some cabinet colleagues, including then Business Secretary Vince Cable and Chancellor George Osborne wanted to reverse this. It was economically illiterate. Current ministers, like the Foreign Secretary Boris Johnson, Chancellor Philip Hammond and Home Secretary Amber Rudd, also want foreign students exempted from the total.

David Cameron’s government aimed to cut immigration figures – including overseas students in that aim meant trying to limit one of the UK’s crucial financial resources. They are worth £25bn to the UK economy, and their fees make up 14 per cent of total university income. And the impact is not just financial – welcoming foreign students is diplomatically and culturally key to Britain’s reputation and its relationship with the rest of the world too. Even more important now Brexit is on its way.

But they stayed in the figures – a situation that, along with counterproductive visa restrictions also introduced by May’s old department, put a lot of foreign students off studying here. For example, there has been a 44 per cent decrease in the number of Indian students coming to Britain to study in the last five years.

Now May’s stubbornness on the migration figures appears to have caught up with her. The Times has revealed that the Prime Minister is ready to “soften her longstanding opposition to taking foreign students out of immigration totals”. It reports that she will offer to change the way the numbers are calculated.

Why the u-turn? No 10 says the concession is to ensure the Higher and Research Bill, key university legislation, can pass due to a Lords amendment urging the government not to count students as “long-term migrants” for “public policy purposes”.

But it will also be a factor in May’s manifesto pledge (and continuation of Cameron’s promise) to cut immigration to the “tens of thousands”. Until today, ministers had been unclear about whether this would be in the manifesto.

Now her u-turn on student figures is being seized upon by opposition parties as “massaging” the migration figures to meet her target. An accusation for which May only has herself, and her steadfast politicising of immigration, to blame.

Anoosh Chakelian is senior writer at the New Statesman.

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