Universal credit plans overhauled after Esther McVey bows to warnings

Universal Credit is the biggest and most fundamental reform to the welfare system since its creation. It is a much needed reform too — from complications to cost, the old system failed claimants and taxpayers alike.

Instead of promoting work, it trapped people on benefits through the ‘16-hour rule’, by which people couldn’t work any more hours or they would be penalised – effectively taxed at 90 per cent. This complicated system had a multitude of benefit premiums, paid through 3 different departments.

In a bid to address concerns raised by campaigners, claimants and MPs, the work and pensions secretary, Esther McVey, announced a raft of changes on Monday to plans governing the transfer of 3 million people on to the new benefit.

The so-called “managed migration” of universal credit claimants has become a major political concern, with two former prime ministers, John Major and Gordon Brown, joining MPs in warning that mishandling the process could trigger a poll tax-style revolt.

Problems with universal credit, especially the long wait for a first benefit payment, have been identified as a key cause of hardship for claimants, with many forced to turn to food banks to survive and tens of thousands running up rent arrears.

McVey’s announcement followed a report by the government’s social security advisory committee (SSAC) that warned of “significant concerns” that the universal credit plans were rushed, too complex and placed too much risk on claimants. MPs will debate the migration regulations in the next few weeks.

The Department for Work and Pensions (DWP) has now said it accepts or will look again at 11 of the report’s 12 recommendations for change. McVey told the Commons on Monday: “We will take a measured approach to delivering managed migration, taking our time to get it right and working with claimants to co-design it.”

The DWP has announced a number of measures as part of £1bn package announced in the budget to help claimants’ transition to universal credit, including providing two weeks’ additional benefit to unemployed claimants to help them manage the five-week wait for a first UC payment.

The SSAC report followed a consultation in which it received a record 455 responses, including more than 300 from individual claimants or their carers. It noted that it had been “particularly struck by the degree of anxiety” about managed migration conveyed by this group.

Sir Ian Diamond, the SSAC chair, said he was pleased that the government had largely accepted the committee’s advice, but said much detail still had to be worked out. He said he was disappointed that the DWP had rejected a key recommendation to abandon plans to force all existing benefit claimants to make a claim for universal credit before they could be migrated to it. The DWP said making a new claim was essential to ensure all data was up to date.

Campaigners, who have lobbied ministers hard to demand changes in recent months, welcomed McVey’s announcement, but said the measures did not go far enough to limit the risk that thousands of vulnerable claimants could be left without benefit income.

Frank Field, who chairs the Commons work and pensions select committee, said: ”[McVey] could not ignore the swell of expert voices warning that the government’s approach to moving vulnerable people to universal credit could end in disaster and destitution. The department deserves credit for listening, but its response fails to provide in full the necessary safeguards for claimants.”

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