The House of Lords Economic Affairs Committee has asked for submissions on ‘The Economics of Universal Credit’. My submission has just appeared here, as an MS Word Document. This is my summary of the main points:
The aims of Universal Credit (questions 1 and 2)
• Universal Credit is a portmanteau benefit, not a simplification.
• It has not reduced costs, reduced error or improved the efficiency of benefit administration.
• ‘Personalisation’ has led to unstable, unreliable income flows.
The relationship of UC to the labour market (questions 6 and 7)
• UC has not evidently reduced worklessness, but the relentless emphasis on work is in any case a distortion of perspective.
• The marginal rate of deduction is very high. There is no good evidence of incentive effects, but arguments on this basis are more concerned with equity than with economic behaviour.
I conclude that “The purposes of UC are defeated by its complexity, and its failure to provide a stable, predictable income.” I doubt that anyone who has followed this blog over the course of the last ten years will be surprised by that judgment.
This document was in MS Word, a proprietary format, because that was what the Lords Committee specified. To make it accessible, here is a PDF version.