In-work poverty is a burning injustice. Universal Credit is a major reform to benefits for working age people that can help loosen the grip of poverty, but it’s in the news almost daily for all the wrong reasons. The Government needs to get on the front foot and reform Universal Credit so it becomes a platform from which people can build a better life.
By the end of this parliament, Universal Credit will be a core part of our country’s public services offer, alongside the NHS, police and schools. It is the service we will turn to when not working or low paid, and as we leave the EU it will shape the living standards of low-income families.
However, there is a widespread political consensus that the status quo with Universal Credit is unsustainable. At the last Budget the Government had to respond to pressure to make adjustments to improve the system as it’s rolled out. Leading up to the Budget, here has been intense pressure from two former Prime Ministers, dozens of Conservative MPs, all other major political parties and a number of charities to make further reforms.
The Government should use the Budget to set out a positive, long-term vision for how Universal Credit can help stem the rising tide of in-work poverty. We all think work should be a route out of poverty, but this is not the case for a growing number of parents and children in our country. This is unacceptable in a compassionate and just society.
By increasing the work allowances for families with children – the amount of money they are allowed to earn before their benefits start to be withdrawn - the Government would boost the budgets of 9.6 million parents and children in working families, half of whom are in poverty. Announcing this in the Budget would see the measure come in just a week after we leave the EU, targeting support at parents struggling to make ends meet while balancing work and caring for their children.
When Universal Credit was first unveiled it was widely welcomed. But choices about how the system is designed and cuts have undermined its potential to be a tool for loosening the grip of poverty. There remain prizes worth having, such as the way Universal Credit makes it easier to move in and out of work without having to constantly reclaim different benefits. It makes it easier to claim all the support you’re entitled to. But there are problems to fix, and a recent leak to the BBC highlighted a number of them.
If the Government simply engages in a tweak here and there to patch up problems, it will risk permanently damaging the reputation of Universal Credit in the eyes of the public. It will also pose a big risk to the 3.2million working households estimated to be worse off on Universal Credit compared to the old tax credit system.
We need to go further and faster with reform to Universal Credit. We must not lose sight of the fact that Universal Credit should be the anchor that low-income families rely on to keep themselves from being swept into poverty. If the Government are serious about being on the side of working families, then now is the time to work with people claiming Universal Credit to find ways that will help address the daily struggles they are having to manage.
There are groups such as the Addressing Poverty through Lived Experience (APLE) Collective who stand ready and willing to work with the government to help design Universal Credit so it can more effectively meet the needs of the people it is there to serve.
Both the Prime Minister and Chancellor in their speeches to Conservative Party conference highlighted the problem of families working hard but feeling no better off. Without reform to Universal Credit this problem will get worse. The Government has the correct diagnosis, now it needs bold action in response. Increasing the work allowances for families with children in the Budget would be a vital step in the right direction.
Katie Schmuecker is Head of Policy and Partnerships at the Joseph Rowntree Foundation