The Guardian view on universal credit: needs more work
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Version 0 of 1. Public service reform is never easy, as the Conservatives already know from the coalition years. Theresa May’s call for change met with hostility at the Police Federation, and Michael Gove’s stampede to create academies made his name so toxic to teachers that the Tory strategist, Lynton Crosby, ordered his reshuffling. Andrew Lansley’s NHS bill got so explosive that No 10 had to impose an unprecedented pause on the parliamentary production line. One reformer, however, set out with that rare political blessing: the benefit of the doubt. Over the years, Iain Duncan Smith’s reputation for administrative competence has been shredded, as delays and logistical problems have dogged his schemes. Only last Friday, a court ruled that shambolic new payments for disabled people had led to unlawful delays. His role as the face of harsh welfare cuts has also eroded his once-bold claims to be a champion of the poor. But despite all the wear and tear, his single biggest reform – the universal credit – is something which all the parties and pundits continue to buy into in principle. Much of the media continues to swallow, entirely uncritically, Mr Duncan Smith’s claims that this one bold move can, once and for all, make work pay for everybody. The truth is that in any social security system there is an inescapable tension between targeting assistance on the neediest and rewarding the efforts of those who can earn. Universal credit can usefully rationalise the trade-off between these two things, but it cannot eliminate it. Work will indeed pay more for many in the new world, but for others it will actually pay less than now. On Monday, the Resolution Foundation publishes an analysis of the Duncan Smith architecture which – while sympathetic to the basic aim of merging numerous benefits – offers a refreshingly clear-headed recognition that benefit policy is always going to involve striking difficult balances. The report shows meticulous respect for scarce public funds and also casts its eyes up from the immediate practical problems dogging the implementation, concentrating instead on asking whether or not the Duncan Smith plans have got those tricky balances right. In several respects, the answer is no. Most particularly, there is a worrying tendency for the planned reforms to operate to the disadvantage of working women. Universal credit expends considerable resources on allowing the main earner in couples – still most often the man – to keep more of what they earn, even though these are people who will often work full time irrespective of benefit rules. By contrast, a family’s second earner – still typically the woman – will often gain less than now from entering work at all, and then again for putting in an extra hour. Further special problems will dog single parents, which overwhelmingly means single mothers of course, with rent to pay. Families with large childcare bills are another problem. The Resolution Foundation invokes a non-exotic example case in which a tangle of tax, universal credit and nursery bills would reduce the effective minimum wage rate for an hour to just 20p. There are further difficult messages for the government. Its tendency to cut away at the credit before it is even up and running is compromising the work-first aims. So, too, is its pig-headed refusal to engage with the real-world snares that could mar a sleek on-paper design, such as how to fit free school meals – which a family either does or doesn’t qualify for – into a system where payments are supposed to change smoothly. There is a need to face up to and correct one self-defeating act of vandalism: the ripping up of nationwide council tax rebates. While every council is free to write its own rules there can be no easy fit with universal credit, and so much is squandered on administration that the Resolution Foundation report suggests that a renationalised system could save the poorest from their new obligation to pay some council tax without any net cost at all. Indeed, various inexpensive tweaks could resolve many of the worst snags identified, and more thoroughgoing improvements could be funded if an axe were taken to costly fiscal distractions, like the new married couple’s allowance. All this is encouraging for Mr Duncan Smith – if, that is, he does something he has not often been good at, and listens carefully to constructive critics. |