Labour has called on the government to postpone the introduction of its flagship welfare reform, universal credit, by a year, arguing that there are too many unresolved problems with the scheme and not enough time to iron them out before the launch in October 2013.
As the work and pensions secretary, Iain Duncan Smith, prepares to endure a grilling from the cross-party work and pensions select committee on Monday afternoon, new concerns about both the detail of the policy and the difficulty of implementing it continue to emerge.
Duncan Smith is said to be angry at reports that the country’s most senior civil servant, the cabinet secretary, Sir Jeremy Heywood, has expressed scepticism about the policy, giving rise to a fear in Whitehall that the entire initiative could be dumped, according to the Sunday Times.
Meanwhile, new research from an independent thinktank, the Social Market Foundation, to be published this week, warns that universal credit will push significant numbers of households into debt and suggests that instead of boosting individuals’ financial resilience, it will worsen their financial circumstances.
Although there has been cross-party support for the concept of universal credit, which will replace six benefits, including jobseeker’s allowance and housing benefit, with one streamlined benefit, both opposition and backbench coalition MPs voiced concerns last week over the number of areas where details remain unresolved, while charities continue to highlight elements of the reform that will adversely affect the people they support.
There are also persistent concerns over whether a complex new computing system, which needs to knit together detailed records from Revenue & Customs and the Department for Work and Pensions, will be ready in time and, politically, suggestions that the Treasury is no longer in harmony with the Department for Work and Pensions over the initiative.
David Cameron attempted to reshuffle Duncan Smith this month amid anxiety over the cost of the proposal and the progress made towards implementing it, but the secretary of state said he wanted to remain.
Stephen Timms, shadow employment minister, said: “They need to allow themselves another year. They have given themselves a year too little to sort it out.”
Concerns range from unease over a lack of clarity about how self-employed workers will file monthly earnings returns, and worry over a proposal to force part-time workers to increase their hours of work or face sanctions, to uncertainty over how council tax benefit (which is excluded from universal credit) and free school meal payments will fit in.
There is further doubt about the government’s expectation that 80% of claimants will claim online at a time when the digital divide between those who are computer literate and have access to the internet and those who do not is growing, when the vast majority of people in social housing have no access to the internet and libraries with free internet access and computer literacy support courses are losing funding.
There is concern that programmers in Warrington, who are writing the online claim form, are having to push forward with the programming before the details of the scheme are fully worked out.
“This is just full of things that haven’t been sorted out,” said Kate Green, a Labour MP. “There are gaps in the policy, so the programmers don’t know what they’re programming yet.”
The shadow work and pensions secretary, Liam Byrne, described the policy as a “flagship that is sinking fast”, and described it as “over budget and late” during a heated debate in the Commons last week. Duncan Smith has repeatedly stated that the project is meeting targets. “We are not over budget on the programme and we are not out of time,” he said last week.
Dame Anne Begg, who chairs the cross-party work and pensions select committee, said MPs would be asking Duncan Smith a range of questions on the progress of the IT development. There would also be questions on the system through which employers will supply real-time earnings data to allow benefits to be calculated on a monthly basis. “We have found Treasury officials complacent. They don’t understand how people lead their lives. Their expectations of employers and individuals are unrealistically high,” she said.
The Social Market Foundation’s Sink or Swim report focuses on the already contentious area of whether a decision to pay claimants their benefits monthly instead of fortnightly will complicate life for those on very low incomes, and concludes that most households oppose the move to monthly benefits, citing fears that they will run out of money at the end of the month. It cites research showing that four out of 10 claimants would find it harder to budget under a monthly payment.
“The government’s laudable aim that universal credit should prepare families for work, boost their resilience to financial shocks and simplify the system is at risk of backfiring,” said Nigel Keohane, SMF deputy director and co-author of the report.
“By moving to a single monthly payment for all benefits, the government is removing the markers and aids that families currently rely on to budget effectively.”
The research also raises concerns about a decision not to pay housing benefit direct to landlords, noting that “many expressed the fear that households would be unable to manage their finances effectively and would overspend, leading to rental arrears, possible eviction and further indebtedness.”
A DWP spokesperson said the decision to pay people monthly was taken to help prepare claimants for a return to work, reflecting the fact that 75% of people in work are paid that way. “Universal credit will be paid monthly because most people in work are paid that way and the system should help people get used to the patterns of working life. But we have always said we would be flexible with people who might struggle to manage their money.” The spokesperson said some exceptions to the monthly payment rule could be made for those who needed to time to tackle debts.
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