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22 October 2018

This new report shows that Universal Credit’s problems are deeper than just money

The flagship reform is a toxic combination of social engineering and austerity. 

By Stephen Bush

Universal Credit’s critics are split: is it a good idea, badly funded, or simply a bad idea? Among Conservative MPs, most think it’s the former: that if it were properly funded, Universal Credit will be an improvement on the legacy benefits system. Opposition MPs are split: some think that Universal Credit can be made fit for purpose with adequate funding, others that the whole endeavour is doomed.

It’s true to say that Universal Credit has been loaded down with heavy cuts to benefits, particularly in-work-benefits: any cut too politically painful to roll out to existing claimants (many of whom vote Conservative), the Treasury has grandfathered into Universal Credit.

But that’s not the only problem with Universal Credit as it stands. Its monthly payments, designed to “simulate work” often force people into arrears if they are leaving temporary work or piecework, which is often paid on a weekly, fortnightly or in the case of some app-based work, daily. And the aim to promote “positive” family structures also has significant implications for people in poverty. One big change is for benefits to be paid to one designated person in each household in a bid to discourage family breakdown.

The trouble is, as a new report by the Home Affairs Select Committee makes clear, it doesn’t just discourage family breakdown – it discourages people (primarily women) – from escaping abusive relationships and makes it easier for financially controlling partners to entrap others.

The report also explodes many of the myths about desirable and undesirable family types. It’s true to say that outcomes – as far as job prospects, health, life expectancy and so on – for people in two-parent households are better than for those in single parent ones, although there are some variations when you control for income and education level, though they are not always statistically significant.

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But what the report illustrates is that the policy choice is not between people staying in healthy and happy two-parent households or lone parent households, but in unhappy and unhealthy two-parent households or lone parent households. Children whose parents remain in abusive or otherwise broken relationships are more likely to develop cognitive difficulties, to misbehave in school, and to themselves end up in unhealthy relationships as adults than children of lone-parent households.

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All of which shows that while Universal Credit does need more money to function, it also needs a big rethink of its aims and approach to be fit for purpose.