Benefits policy a big challenge for whoever wins election, says IFS

Think tank sets out the scale of challenge to roll out universal credit or halt wide-ranging benefit reform scheme

Photo: PA

By Colin Marrs

19 Nov 2019

The next government will face huge political risk from universal credit, whether it is expanded under the Conservatives or scrapped under Labour, according to the Institute for Fiscal Studies.

A briefing note prepared by the institute found that significant risks accompany changes to the credit due to take place in the next Parliament under the current timetable.
However, proposals by Labour to scrap Universal Credit would also pose a risk, according to the think tank.

Tom Waters, research economist at the IFS, said: "The next government faces big questions about what it will do with universal credit.


“Millions more families are due to be moved over to UC, and getting that transition right is a key challenge – mistakes could leave many families suddenly without support.”
He added: “Of course, a new government could scrap UC altogether – as Labour has indicated an aspiration to do – but redesigning the entire working-age benefit system for the second time in a decade could bring complexity and risks as big as those that UC has already thrown up."

If the current timetable for the roll-out of UC is maintained after the election, the process of moving existing benefits claimants onto the single benefit is likely to mean the system comes under increasing political pressure, the IFS said.

So far, the 2.5m families on UC are have all begun a new benefits claim since the benefit was introduced in their area.

The next stage – moving around 4.5m more families already claiming one of the six benefits UC is replacing – will be challenging, the IFS said.

Its briefing said that, rather than transferring people onto the new system automatically, the government’s current plan involves ceasing payments of legacy benefits and requiring individuals to make a new claim for UC within a specific time frame.

“This may be particularly difficult for some claimants with incapacities, who make up about half of the group who will be moved over to UC,” the briefing note said.
“If they fail to do so in time, they will be left without benefits until they do start the new claim.”

The government will also face the question of how to deal with the current five-week wait between an application for UC and receipt of the benefit, according to the IFS.

The Labour party has already announced it would make payments during the interim period, which the IFS estimated would cost up to £1.5bn a year.

The IFS said that the specifics of Labour’s pledge to “scrap” UC so far “amount only to tweaks to the system, and nothing remotely akin to scrapping it”.

It warned: “If the intention really were to replace UC with something fundamentally different – as opposed to, say, a rebranding exercise accompanied by small tweaks and/or a change to the amount spent on it – then this would effectively be a commitment to redesign the entire working-age means-tested benefit system for the second time in a decade.

“The administrative complexity and risks of once again moving millions of families onto a new benefit could be as great as the challenges that UC has already thrown up.”

In September, The Trussell Trust linked the five-week wait with a 30% increase in demand for foodbanks in areas where UC had been in place for over a year.

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