Benefits vs. costs: is Universal Credit fit for purpose?

Millions of people will soon be affected by a welfare shake-up that will see all claimants of older benefits moved over to universal credit.

A managed migration system to transfer everyone to universal credit (UC) restarted in May this year, following a “brief pause” due to the Covid-19 pandemic, said the Daily Mirror.

It is a “huge process” that will see those who remain on old-style benefits moved over in phases, and is set to be completed by the end of December 2024 to meet a target set by the Department for Work and Pensions (DWP).

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Around 2.6 million people are thought to still be on the “old-style” benefits being phased out, which include tax credits, income support and jobseeker’s allowance.

According to the Mirror, claimants in Bolton, Medway, Truro, Falmouth and Harrow should have begun receiving letters about the migration, with everyone affected by these changes due to receive a “migration notice” informing them of the switch, and giving claimants a three-month window to claim UC.

Is UC fit for purpose?

The system as a whole has been dogged by controversy since being introduced in 2013.

Universal credit was designed “to make claiming benefits simpler”, the BBC says. It replaced six benefits – including income support and housing benefit – and merged them into one payment.

Former Tory work and pensions minister Iain Duncan Smith, who devised the system, has insisted that “we will be grateful for universal credit” when looking back on the pandemic – and called on MPs “to stop trying to make it a political football”.

In an article published on the i news site in December 2020, he argued that under the “clunky” former system of benefit payments, “we would have had queues at Jobcentres snaking round city centres” as unemployment numbers rise.

Universal credit supports people who have jobs too, Duncan Smith continued, including “those in work, in part-time work, in-between work and looking for work. The system will support them all.”

However, there was strong opposition to his brainchild both inside and outside the Commons.

The New Statesman’s UK editor Anoosh Chakelian has argued that the way the scheme was “designed and automated” is “pushing people into poverty” and “creating misery” for claimants.

She highlights the method of means testing, which is based on the claimant’s past calendar month of earnings and is calculated by a “poorly designed” algorithm. “This means that irregular shifts, frequency and dates of payments, and fluctuations in a person’s earnings can be misinterpreted by the system – leaving some with very little income the following month because their earnings have been overestimated by the algorithm,” Chakelian writes.

The Spectator’s assistant editor Isabel Hardman was also highly critical of the system, arguing that its greatest flaw “is the shocking loss of money that some claimants face”.

Another major problem “is the amount of time it takes for claimants to receive it, which can leave many of them unable to cover their rent and so on”, she added.