Keeping the Universal Credit uplift is critical to deliver on our pledge to level up
Instead of seeing the £20 uplift as a problem to be solved, we should see it as an investment in a system that can turn people’s lives around.
Universal Credit (UC) has been one of the quiet government successes of the pandemic and in doing so well, it has proven itself for millions a real lifeline through difficult times.
The cumbersome legacy system, which UC replaced, would not have coped with the sudden influx of numbers during the crisis of a global pandemic. More than one million new claims were made in just two weeks in March 2020 with 96 per cent of claims made during the first months paid in full and on time, a figure which is now at 98 per cent.
If we had still been operating under the clunky, paper-based system of legacy benefits the entire welfare system would have been at the point of collapse. Because of Universal Credit that did not happen.
Under the legacy system, claimants would have had to que up for their benefit, increasing infection risks as they did so. But because UC is online, that problem was avoided.
In the face of this unprecedented challenge Rishi Sunak, the Chancellor, made the decision to temporarily increase the amount UC claimants received, which became known as the ‘uplift’. This meant families on UC had an extra £20 a week in their pockets and over the winter of 2020, insulating 600,000 people from poverty.
The uplift has been essential in allowing people to live with dignity. This is at the very heart of what makes us Conservatives
I believe the Chancellor should seize the opportunity to protect more families from poverty and make the £20 uplift permanent.
A vital part of delivering the Conservative strategy for relieving poverty is to ensure we have a welfare system that helps those most in need and importantly supports aspiration. It does this because UC isn’t just an out of work benefit, but importantly a back to work benefit too that helps people into work and to work more hours untill they are full time.
After all, work is the best route out of poverty and vitally, nearly 40 per cent of the current 5.7 million UC claimants are working some hours. As those hours in work increases UC scales back, so no one is penalised for securing extra hours of work with UC allowing for a flexible taper rate. That is why the uplift should be seen as an investment, which as people work more and more hours and eventually pay taxes, the investment is returned.
UC is a tried and tested means to get support to those who need it the most and removing the uplift would hit one third of working age families with children across the country.
The extra £20 has returned to UC some of the investment that was cut from my original design. It has been essential in allowing people to live with dignity. This is at the very heart of what makes us Conservatives.
Research into UC by the Centre for Social Justice and more recently by the Resolution foundation has shown increases to UC, and in particular raising the UC work allowance, is a notably much more efficient way of improving the incomes of the poorest than raising the personal income tax allowance.
That’s why instead of seeing this £20 extra for UC as a problem to be solved, we should see it as an investment in a system that can turn people’s lives around.
The Treasury must understand that as UC gives a true picture of the need of each household, it can be better targeted and more efficient, thus resulting in significant further savings.
As the jobs market begins to expand, UC could, for example, lower the taper rate. This would leave low hours workers with more money helping accelerate them into full-time work and off benefits.
As the economy reopens, UC won’t just be critical in building social cohesion but will be seen as an investment in people who have too often been left behind and as such, ultimately delivering on the government’s election pledge of levelling up.
Iain Duncan Smith is the Conservative MP for Chingford and Woodford Green.
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