Universal credit is undermining even the Tory ambition to make work pay

When universal credit was launched in April 2013, it was supposed to be “the most radical overhaul of our welfare system since its inception”.

According to the Tories, this key part of their welfare “revolution” would ensure that work pays for the millions of people trapped on benefits.

Two and a half years later, most people either haven’t heard of universal credit or know very little about it. Repeated delays, malfunctions and “resets” aside, universal credit was supposed to achieve just one thing. As Iain Duncan Smith, the work and pensions secretary, said when he published the initial white paper back in 2010: “At its heart, universal credit has a simple ambition – to make work pay, even for the poorest. This will finally make it easier for people to see they will be consistently and transparently better off for each hour they work and every pound they earn.”

To that end, universal credit was carefully designed to allow all households to earn a certain amount of money in work before they would start to lose their benefits. That was the point of the “work allowance”, and the thresholds were deliberately set at generous levels so that no one moving into work would lose out from doing so.

We seem to have come a long way since then. Cuts that the government quietly slipped through the back door just a couple of weeks ago mean that the majority of households now face a drastic reduction in the amount they can earn in work before their benefit starts to be taken away.

For all households with no dependent children, whether singles or couples, there will no longer be any work allowance. The effect on these groups will be stark: if they are unemployed and looking for work, their monthly payment of universal credit will be cut the moment they start working.

Single parents, as is so often the case under the Tories, will be the worst hit by these changes. As some single parent households will be deprived of almost half their current work allowance, they will start to lose out after just 12 hours of work each week, compared with 22 now.

It is hard to imagine changes more fundamentally opposed to the original purpose of this flagship Tory welfare reform.

We should pay close attention to what the government is doing to universal credit because the reality is that if it succeeds in its plan to complete the rollout by the end of this parliament, all these arguments we’ve been having about tax credits will end up being completely irrelevant.

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