In the New Statesman, Emily Thonberrry MP bemoaned the effect of cuts on Universal Credit’.
“For all the flaws in its implementation, Universal Credit was actually a perfectly good idea, at least in theory. By bringing a number of benefits and tax credits together into a single monthly payment, which was available to those in work as well as out and would be gradually withdrawn as earnings increased, the government was working to the fundamental principle that work should always pay – and be seen to pay. … It is becoming increasingly clear that cutting tax credits and cutting Universal Credit is effectively the same thing. They hit the same families in the same way – the only difference is in the timing.”
I’ve commented often enough about the deficiencies of Universal Credit, which was never a ‘perfectly good idea’. The second part is more interesting. The ‘work allowance’ is not quite the same as an earnings disregard. There is an amount that Universal Credit claimants can claim before they start to lose income (£111 per month for single people and couples – that’s most current claimants – rising to £734 for a single parent who doesn’t rent). Then there is a gradual loss of benefit, without a clearly defined upper limit.
From April 2016, the government intends to change that range from zero to £394. Most existing claimants will start at zero; unless they rent, their Universal Credit will probably have disappeared by the time they work half-time on a minimum wage (£7.20 an hour from April). I’ve always been sceptical about claims that there is no ‘incentive’ to work – people who say it usually don’t understand how low current benefits are. What the change will remove is any incentive to stay in contact with Universal Credit or Jobcentre Plus, because the benefit will be withdrawn so sharply once someone gets part time work. That undermines the idea that people will move seamlessly between states.