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  • David R Thompson

Universal Credit in the UK is Failing – Because it isn’t Universal Basic Income

The difficulties with the UK’s reformed benefits system, known as Universal Credit, are as endless as they are predictable.

Of course, there are the delays and additional expense caused by bringing in an entirely new IT system to take over the calculation of benefits and reduce the need for staff to think for themselves. We’ve come to expect that. But there are structural problems too. There is the built-in delay in paying out the new benefit after a claim, meaning that the poorest are deliberately deprived of their income whilst waiting for their social security cheque. There is the fact that that Universal Credit can only be applied for online, excluding thousands of vulnerable claimants without internet access, or those who have difficulty with reading, unless they can obtain help from cash-strapped councils and charities. There was a phone helpline, but it was premium rate until recently. The benefit is also paid to households, not individuals, so that one person will get all the money, opening up other members of the family to control and abuse. And there are the inevitable government cuts to the Universal Credit budget so that the new benefit will be assessed as less generous than the old no matter what, meaning that tight budgets are exploded by a sudden reduced income. All this is true, but the fact is that Universal Credit was always going to fail for one simple reason.

It is assessed against other income to limit entitlement to it, and it can be further limited by the sanctions imposed on people not trying hard enough, so it is reduced as and when this is felt to be appropriate. As such, it’s not a regular income, and it’s conditional on a person being in poverty. In short, it is not a Universal Basic Income.

The objections within government against benefits being awarded to those who do not ‘deserve’ them are so dominant that you have a situation where the tail is wagging the dog. Universal Credit is not constructed to provide an income for those who have fallen on hard times, or are too ill to work, or have lost a job through no fault of their own; which might in normal times be seen as the main driver for the benefits system. Not really. It is designed to enable a financial punishment for people to get work, get more work, and continue to find more work until they’re off benefits completely. It’s like a contents insurance policy that forces you to build a wall around your house until you can’t get out. But at least you’re not a risk any more.

We live in a world where people have a fluctuating income because of their zero-hour contracts and other part-time arrangements. Universal Credit and systems like it can’t function effectively in a world like this. It is too complicated to cope effectively with such an income because it has to assess a different payment every week. It also can’t cope in a world where people will need to take time away from the employment market to retrain and acquire the new skills that the new employment markets require. The system won’t allow people to take time off to retrain. They have to keep working. So what happens to a workforce that is designed to meet the requirements of twenty or thirty years ago? They end up on benefits because they can’t get work.

Universal Basic Income addresses these problems. As Guy Standing, Professor of Development Studies at the School of Oriental and African Studies, University of London says [in the article here] “A basic income removes onerous benefit conditions to seek and take employment, yet increases the incentive to take low-wage jobs because it is not withdrawn as income rises.”

Universal Credit is a predictably hopeless attempt to rationalise and simplify supplementary benefits which fails because it is actually a means of forcing people perceived as too lazy to get work. But it also fails on its own terms, because its regime is too complicated and takes away too much cash to be proficient in persuading people that work pays.

If you want people to be rewarded with an improved lifestyle for their efforts in finding work – give them a Universal Basic Income. That way, people get enough money to live. But they also get to keep whatever else they earn through their own efforts. Personal responsibility at last. Without the indignity of begging for a handout.

David R Thompson