THE BLOG
14/01/2018 18:59 GMT | Updated 14/01/2018 18:59 GMT

Five Immediate Fixes To Make Work Pay Under Universal Credit

Wiggle room and political capital in the first few weeks of her appointment enables Esther McVey to signal a number of fixes

DANIEL LEAL-OLIVAS via Getty Images

Much of what Esther McVey has said in the past, and her record as a DWP minister in the coalition government, meant that her appointment as Secretary of State for Work and Pensions will alarm all those who believe in a more compassionate and empowering society. But as the rollout of Universal Credit (UC) creaks on, perhaps there is a chance she’ll be outspoken enough to acknowledge that its central purpose is floundering - under UC, work simply doesn’t pay - and bold enough to take radical action.

Fundamental flaws in the design of UC (pointed out by Labour since 2011) have been compounded by cuts to the value of the benefit, including cuts to the work allowance which allows claimants to keep more of their income before their benefit’s affected, and by near-stagnant wages failing to keep up with rising household bills. Rather than tackling these issues, however, recent government rhetoric (and policy) has switched from making work pay and reducing poverty to simply boosting the number in employment. To be sure, enabling those who can work to do so is an important goal for public policy, but the Government’s brutal, sanctions-heavy approach has led to an unacceptable and continuing growth in in-work poverty.

Despite my many misgivings about her, McVey is a new broom in the top job at DWP, and so has some wiggle room and political capital in the first few weeks of her appointment which would enable her to signal a number of important fixes to Universal Credit. That’s why I’m calling on her to halt the damage UC is doing to work incentives, and to repair the gaping holes opening now in the safety net, which will plunge millions of families into crisis, by making five urgently needed fixes, as follows:

  1. Increase work allowances and reduce the taper rate in UC so people keep more of their earnings
  2. Follow Labour’s example and commit to passporting every family on UC to free school meals, to avoid cliff-edges as household earnings increase.
  3. Ensure a poverty-busting safety net, for those in work as well as out of it, by lifting the brutal freeze on working age benefits, and introduce a ‘lock’ that guarantees annual uprating
  4. Reconnect Housing Benefit rates to local market rents, and reinstate Support for Mortgage Interest for homeowners who move into work, so that every family can afford to live in decent housing
  5. Allow claimants to choose to receive their UC payment every fortnight, to stop households running up debt while waiting for payment.

Of course, these changes can’t be made without cost or effort, and the fact that Esther McVey is the fifth Secretary of State at DWP in two years, and that the prime minister reportedly struggled to persuade other, perhaps more wary, colleagues to take on the role, may be a worrying sign of just how tough it is to fix Universal Credit. But if it’s to fulfil its promise “to remove the barriers to work and earning more by providing the stronger financial incentives to encourage people to work and for those in work to increase their earnings,” a no-holds-barred, go-for-it approach from a new secretary of state could be just what could deliver it.

Kate Green is the Labour MP for Stretford and Urmston