Support 100 years of independent journalism.

  1. Politics
8 March 2018updated 24 Jun 2021 12:25pm

The Conservatives are heading into trouble over universal credit

Two tricky votes are only the start of the problem.

By Stephen Bush

What is universal credit good for, exactly? It hasn’t made the system “more simple”, it is less accessible unless you have ready access to a computer, and it can’t even be said to be succeeding on its own terms in reducing the incentives to work less.

Two new changes to the benefit will further aggravate the incentives to work less and claim more, by introducing restrictions on which claimants of universal credit will receive two benefits: free school meals and free childcare for children aged two to three. Under the new plans, families on universal credit would have to earn less than £7,400 a year to receive the benefits – but the problem is that in order to recoup the costs of the school meal or childcare they would have to earn an additional £1000, incentivising families to work less or forego promotions rather than face a financial cliff-edge.

The trouble is the one thing that universal credit has been good for is getting the Treasury out of tight spots. Need to find money for a U-Turn or a pet project? Simple trick: just announce welfare cuts to be phased in when universal credit is fully operational. (This was something Osborne was particularly fond of, as neither he nor many Treasury officials believed the troubled benefit would ever be fully operational.) 

This trick was also used when Osborne had to cancel his planned cuts to tax credits in the face of heavy opposition back in the autumn of 2015 – he scrapped the cuts for tax credits, but announced they would still go ahead as when universal credit was rolled out.

For a while, this had the handy benefit of deferring benefits cuts that both had painful consequences for real people and were politically painful for the government. But now universal credit actually is rolling out in earnest, the tactic has run out of road and the government could be about to face a repeat of its difficulties in late 2015.

The first problem is parliamentary: Angela Rayner has forced binding votes on the two statutory instruments that will limit access to free childcare and free school meals. The DUP opposes both measures, which adds to the parliamentary problem, but they could of course abstain.

But the bigger problem is not in Parliament, but outside of it. Don’t forget that tax credits cuts passed the House of Commons just fine – but when the impact began to be felt outside of Westminster they became impossible to carry through.

It all comes back to one of the most difficult problems facing Theresa May: that the commitments she inherited on reducing the United Kingdom’s social security spend can’t be met without terrible consequences, both for ordinary people and her government. And it looks likely that universal credit may no longer even be any good at delaying the reckoning.