Universal Credit

I spoke in the debate in the Scottish Parliament on 'Ending Austerity, Poverty and Inequality' on 24 October 2018.' Here is the transcript of the speech.

The universal credit project is in crisis. It has been universally condemned and it has fatal design flaws. It is hugely underfunded. It is hurting the poorest and most vulnerable people in our society. Members should not take my word for that. The fact that it is underfunded and is hurting people is the admission of the secretary of state, Esther McVey, who contradicted Downing Street by saying that families would be worse off. Do the Scottish Tories not know that? John Major, their former Prime Minister, has said that it will be their poll-tax moment. I suggest that Tory members, who have consistently defended the policy, might want to think a little about how universally condemned the system is. Even Heidi Allen MP says that it is a question of morality.

Let us look to the facts. The Resolution Foundation suggests that, overall, universal credit is set to lose people £3 billion compared with the system that it replaces—the legacy benefits that have been referred to. It will leave families £600 or more worse off per year, on average, and single parents will be even worse off, by about £1,300.

The worst element of the universal credit system is the two-child limit, which is the most draconian element of the reforms. Michelle Ballantyne says that parents should think about how many children they should have, but why should any policy ask the children to pay the price?

Universal credit is not even fully rolled out yet. It is a system that promised to change the face of the welfare system, using benefits to encourage people to work. There have been some positive outcomes but, overall, universal credit has been a key factor in pushing people into poverty and widening the inequality gap It does not end there; it is a problem for many people, particularly women in abusive or coercive relationships.

The tax credit and child tax credit system that Alex Rowley talked about lifted tens of thousands of children out of poverty, but the group of parents in that system, who have not previously been subject to conditionality, will now face the conditionality that is attached to that element of universal credit. They will be poorer under that system, which will undo the work of the last Labour Government, under Gordon Brown, in reducing child poverty. The Office for Budget Responsibility estimates that the full roll-out of universal credit will affect at least a third of working households.

Even back when the idea of tax credits was floated by Labour, women MPs quickly saw that the Treasury plan would cause problems. A credit system means that the money is generally paid to main earners, who are usually men. That is why child tax credits were brought in, in addition. They made sure that women—mostly—would have some control over their family’s finances.

We have discussed the subject of abusive relationships in Parliament. The reason why universal credit is a problem for people in such relationships is that it is paid into one person’s or a couple’s bank account. If one partner in a two-income household receives a bonus, for example, universal credit treats that as joint income and the payment is adjusted accordingly. However, there can be issues in cases when one partner refuses to share the bonus that they earned—we can see the impact, particularly on women.

In the end, universal credit does not increase fairness, as lain Duncan Smith claimed it would, and it certainly does not increase simplicity. Women’s Aid and the Trades Union Congress note that 52 per cent of survivors living with their abusers said that financial abuse had prevented them from leaving their relationships. Universal credit is pushing people into poverty. It is creating the deepest social problems. We must scrap it now until we can make fundamental reforms, so that it does what it was meant to.

Copyright Pauline McNeill for the Glasgow Region
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