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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together into a single monthly payment, which was available to those in work as well as out and would be gradually withdrawn as earnings increased, the government was working to the fundamental principle that work should always pay – and be seen to pay.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.

Photo: André Spicer
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“It’s scary to do it again”: the five-year-old fined £150 for running a lemonade stand

Enforcement officers penalised a child selling home-made lemonade in the street. Her father tells the full story. 

It was a lively Saturday afternoon in east London’s Mile End. Groups of people streamed through residential streets on their way to a music festival in the local park; booming bass could be heard from the surrounding houses.

One five-year-old girl who lived in the area had an idea. She had been to her school’s summer fête recently and looked longingly at the stalls. She loved the idea of setting up her own stall, and today was a good day for it.

“She eventually came round to the idea of selling lemonade,” her father André Spicer tells me. So he and his daughter went to their local shop to buy some lemons. They mixed a few jugs of lemonade, the girl made a fetching A4 sign with some lemons drawn on it – 50p for a small cup, £1 for a large – and they carried a table from home to the end of their road. 

“People suddenly started coming up and buying stuff, pretty quickly, and they were very happy,” Spicer recalls. “People looked overjoyed at this cute little girl on the side of the road – community feel and all that sort of stuff.”

But the heart-warming scene was soon interrupted. After about half an hour of what Spicer describes as “brisk” trade – his daughter’s recipe secret was some mint and a little bit of cucumber, for a “bit of a British touch” – four enforcement officers came striding up to the stand.

Three were in uniform, and one was in plain clothes. One uniformed officer turned the camera on his vest on, and began reciting a legal script at the weeping five-year-old.

“You’re trading without a licence, pursuant to x, y, z act and blah dah dah dah, really going through a script,” Spicer tells me, saying they showed no compassion for his daughter. “This is my job, I’m doing it and that’s it, basically.”

The girl burst into tears the moment they arrived.

“Officials have some degree of intimidation. I’m a grown adult, so I wasn’t super intimidated, but I was a bit shocked,” says Spicer. “But my daughter was intimidated. She started crying straight away.”

As they continued to recite their legalese, her father picked her up to try to comfort her – but that didn’t stop the officers giving her stall a £150 fine and handing them a penalty notice. “TRADING WITHOUT LICENCE,” it screamed.


Picture: André Spicer

“She was crying and repeating, ‘I’ve done a bad thing’,” says Spicer. “As we walked home, I had to try and convince her that it wasn’t her, it wasn’t her fault. It wasn’t her who had done something bad.”

She cried all the way home, and it wasn’t until she watched her favourite film, Brave, that she calmed down. It was then that Spicer suggested next time they would “do it all correctly”, get a permit, and set up another stand.

“No, I don’t want to, it’s a bit scary to do it again,” she replied. Her father hopes that “she’ll be able to get over it”, and that her enterprising spirit will return.

The Council has since apologised and cancelled the fine, and called on its officials to “show common sense and to use their powers sensibly”.

But Spicer felt “there’s a bigger principle here”, and wrote a piece for the Telegraph arguing that children in modern Britain are too restricted.

He would “absolutely” encourage his daughter to set up another stall, and “I’d encourage other people to go and do it as well. It’s a great way to spend a bit of time with the kids in the holidays, and they might learn something.”

A fitting reminder of the great life lesson: when life gives you a fixed penalty notice, make lemonade.

Anoosh Chakelian is senior writer at the New Statesman.