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14 September 2021

Conservative MPs have a familiar worry about the Universal Credit cut

As welfare is cut again, Tory MPs are haunted by the consequences of George Osborne’s 2015 Budget.

By Stephen Bush

George Osborne’s 2015 Budget is surely a contender for one of the most consequential of recent times: not so much because of the measures it contained, most of which have been unpicked or were mothballed before they were enacted, but because of its political consequences. Although the Budget passed the House of Commons without incident, it proved politically explosive once implemented. The biggest cause of Tory pain? The £4.4bn of planned cuts to tax credits. 

The political fallout of the planned cuts saw David Cameron’s approval ratings collapse and Osborne’s stock in Westminster crumble. Given the closeness of the 2016 EU referendum result, which swept both Cameron and Osborne out of politics, it seems at least highly plausible that, without the political storm caused by those cuts, the UK would not have voted for Brexit and that neither Cameron nor Osborne would have lost power suddenly and seemingly permanently in June 2016. 

And while we can’t say for sure how much the 2017 general election result owed to Conservative failure or Labour success, it surely helped Labour that the Tories had implemented a succession of austere budgets. (While Philip Hammond’s budgets from 2017-19 were also pretty austere, particularly for local authorities, they were more expansive than the 2015-17 ones.) 

[See also: “IT problems” don’t stop Rishi Sunak raising benefits, says Universal Credit creator]

Now, some Conservatives fear that the same story is about to play out with the end of the £20-a-week increase in Universal Credit: a cut that, at more than £5bn, is much bigger not only than the £4.4bn of tax credit cuts laid out by Osborne, but bigger still than the comparatively small upfront cut of less than £1bn that Osborne had planned to introduce in 2015. In fact, it represents the biggest overnight cut to benefits in the history of the welfare state. 

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Ministers in the Department of Work and Pensions have fought a rearguard action to prevent it, and other MPs are likewise worried that Rishi Sunak is about to oversee a repeat of the political disaster of 2015. “One way a bigger majority is a problem,” one worried MP told me, “is that there is no safety rope: if Downing Street makes a mistake, it’s not getting stopped here, it’s getting stopped once it makes a stink this time.” 

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Why might it be different this time? Well, Osborne’s cuts were to a longstanding benefit: one that had been in place for many years. The argument that some of Sunak’s allies are making for why this isn’t 2015 all over again is that the £20 uplift was a pandemic-era measure, and that removing it is very different, politically, simply because it has been around for less time and because the pandemic provides a “reset moment” that makes what would otherwise be a politically impossible cut survivable. 

Are they right? Maybe, but while the £20 uplift has not been in place for very long in the lifetime of the country, it has been in place for quite a long time if you are, say, the parent of a two-year-old child earning on or slightly above the minimum wage. If the pandemic isn’t a “reset moment”, then the Conservatives, as well as people in receipt of Universal Credit could be in for a very bumpy ride.

[See also: Why Thérèse Coffey is wrong about Universal Credit claimants and work]