It was announced, over the weekend, that the Prime Minister would be arguing for regional variations in benefits; when the speech was made, that section was dropped. The basic argument for varying benefits is that people have different needs in different places, and that benefits have different relationships to the labour market. There is already some variation in practice, because rents are set at different levels. If benefits were set at a level to meet people’s subsistence needs, there could be an argument for regional benefits; that is why the proposition might seem to some to make sense. The stumbling block is that benefits are not actually related to subsistence needs – they drifted away from that model more than thirty years ago – and they are now being redesigned to work on a completely different principle.
Universal Credit is not supposed to give people a fixed amount of benefit; it gives them a level of income that varies partly with their circumstances, and partly with the amount of work they do. The benefit is supposed to give people a clear, predictable final income that increases as their earnings increase. People who earn more are supposed to finish with more money than others – that is the whole point. If there was a regional variation, they could finish with less. The effect of giving people different benefits in different places would be to make final income unpredictable, especially for people who move between jobs. And because the benefit is, at root, a tax credit, it would also imply different rates of taxation for people in different parts of the country. Neither of these consequences is indefensible, but they are certainly inconsistent with what the government says it is trying to do.