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Fri, 27 November 2020

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Scrap Universal Credit and replace it with a system that offers a safety net for all

Scrap Universal Credit and replace it with a system that offers a safety net for all

Universal Credit has failed because it is a system designed by those who never expected to use it, writes Jonathan Reynolds MP. | PA Images

4 min read

We should support people back to work, not push them into poverty. Current social security measures are inadequate, and children are paying the price.

Universal Credit is fundamentally flawed. It has become synonymous with food banks, debt and insecurity. Some 2.3 million people are currently receiving Universal Credit, a figure only expected to rise as the Government stubbornly removes the furlough scheme in one devastating blow to the economy.  

The Government is attempting to paint Universal Credit as a success story because, unlike its test and trace scheme, the system didn’t collapse. Sadly, the issues Labour raised at the start of this crisis – that the five-week wait would start claimants off in debt, and that the two-child limit would push children into poverty – have all borne out. 

The real story of Universal Credit during this crisis is a system which has led to a 61% increase in foodbank use. According to the Trussell Trust, that’s six parcels given out every minute. More households are now caught by the benefit cap than ever before, a 93% rise from February to May this year, with the overwhelming majority of these households home to children.  

Unsurprisingly, this has led to horrifying levels of child poverty; 30% of children, or nine children in a classroom of 30, are living in poverty here in the UK. To claim this record as a success shows just how low the Government has set the bar for itself on social security.  

Fundamentally, Universal Credit has failed because it is a system designed by those who never expected to have to use it themselves. It relies on a caricature of life on low income and the Government has never been willing to listen to the voices of people on it – something I know from my constituency being one of the original pathfinder areas. Labour believes Universal Credit should be scrapped and replaced with a system which offers a proper safety net and decent support to all. 

Months into this crisis, too many people are still falling through the gaps and it is clear children and young families are paying the price. 

The latest labour market overview from the Office for National Statistics makes for sobering reading. More than five million workers are still temporarily away from work, with half of those having been away for more than three months. We have seen the biggest fall in employment among those aged 18-24 since records began, yet this incompetent Government can’t get the Kickstart job placements scheme launched in earnest or the necessary work coaches in place to help young people find work. It is clear that more and more people will therefore need to turn to a system which does not offer adequate support.  

Labour has long been calling for changes to social security to avoid entrenching people into a cycle of poverty they cannot escape. We have been clear that the Government must adopt five urgent social security measures to provide immediate support to people affected by the coronavirus crisis: 

  • Convert Universal Credit advances into grants instead of loans, ending the five-week wait. 
  • Remove the £16,000 savings limit which disqualifies individuals from accessing Universal Credit. 
  • Suspend the benefit cap. 
  • Abolish the two-child limit in Universal Credit and Tax Credits. 
  • Uprate legacy benefits to match the increase in Universal Credit, providing an immediate increase in Jobseeker’s Allowance and Employment Support Allowance. 

These five measures would radically improve the living standards of those in receipt of social security. It would offer a genuine safety net to those who find themselves out of work in the most difficult jobs market in a generation. 

While the changes to Universal Credit are welcome, the Government must take further, urgent action to ensure Universal Credit offers a genuine safety net to those who need it. Months into this crisis, too many people are still falling through the gaps and it is clear children and young families are paying the price.  

We are in the midst of a jobs crisis which is set to worsen as we approach the Government’s furlough cliff edge. That jobs crisis requires a system designed to support people back to work, not push them into poverty and debt.

 

Jonathan Reynolds is the Labour and Co-operative MP for Stalybridge and Hyde, and shadow work and pensions secretary.

Read the most recent article written by Jonathan Reynolds MP - Cutting Universal Credit will plunge families further into poverty and gut-wrenching hardship

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