WATCH: John McDonnell says Labour likely to axe 'shambles' Universal Credit

Posted On: 
7th October 2018

John McDonnell has dropped the strongest hint yet that Labour would scrap the controversial Universal Credit welfare overhaul if it wins power.

The Shadow Chancellor called for a "cross-party debate" about the future of welfare.

The Shadow Chancellor said people were "coming to the conclusion" that the system - which has been dogged by delays and savaged by public spending watchdogs - has "got to go".

Labour has so far stopped short of calling for Universal Credit to be ditched, instead launching a wide-ranging review of the social security system at its annual conference.

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But the Shadow Chancellor said Labour was now likely to shelve its support for the whole shake-up, which it has previously backed in principle.

"I think most people now are coming to the conclusion it's got to be scrapped," he told Sky News' Sophy Ridge.

"I've been listening to people over the last few weeks about the rollout in their particular areas. I've been looking at what the Government's said, at how they're seeking to reform it. The reforms haven't worked.

"I think we're at that stage now where it's not sustainable any more. It's not a system that can work."

Universal Credit aims to roll six existing benefits into one, and provide better incentives for people to move off welfare and into work.

But its rollout has been sharply criticised, including by the National Audit Office, which said the Department for Work and Pensions appeared "unsympathetic to claimants" facing hardship.

The spending watchdog also questioned if it would "ever be possible" to measure whether Universal Credit had in fact boosted employment.

Work and Pensions Secretary Esther McVey is meanwhile reported to have warned Cabinet colleagues this week that the introduction of Universal Credit could see millions of families lose up to £200 per month.

Seizing on that warning, Mr McDonnell said: “It's in shambles, and actually I think it's iniquitous as well.

"To have government ministers being privately briefed that families are going to lose £200 a month - and these are some of the poorest families in our community - that's just not acceptable.

"So I think we're moving towards a conclusion now that you can't save the thing. It's got to go."

However, the Shadow Chancellor refused to be drawn on what Labour would replace Universal Credit with if the party takes power - prompting fresh criticism from the Conservatives.

Some £1.9bn has already been pumped into setting up the scheme, according to the NAO, which warned there was now "no practical alternative to continuing" with it.

Mr McDonnell instead said there needed to be "a root and branch examination" of the entire benefits system.


Tory chairman Brandon Lewis hit out at Labour's apparent shift, saying Mr McDonnell was "not able to outline what Labour would do exactly" if it scrapped Universal Credit.

He told the BBC's Andrew Marr: "The reason we think Universal Credit is the right way to go is that it does get more people into work, it ensures that work pays and it’s fair for the taxpayer."

But Mr Lewis refused to deny the report, carried by The Times, that Ms McVey had told Cabinet ministers that millions of families could be clobbered under the scheme.

"Well, as you move onto Universal Credit, of course, the system itself looks at the individual and comes up with an approach that is holistic to somebody's needs," the top Tory said.

"My constituency in Great Yarmouth was one of the pilots that rolled the housing benefit in as well. So there are changes as people go forward."

Pressed again on the report, he added: "It depends on the individual's needs. There's a small percentage of the country this is being rolled out to at the moment.

"We're doing this very slowly, very methodically, to make sure we are learning as we roll this out to get this right. And ultimately it's working.

"It's getting more people back into work in a sustainable way and ensuring that work does pay."