The overwhelming consensus is that the government’s universal credit is a wonderful idea. I beg to differ.
There are two issues here: will it work, and is the reform desirable? On both counts the universal credit gets a red card.
When newly assembled and the Commons first debated Iain Duncan Smith’s flagship policy, I was, I think, the only member to sound a note of discord to the general harmony of praise. I was sceptical on whether the government could deliver the massive IT programme required for the universal credit. More importantly, I doubted whether it was desirable to trap even more families on to means tested assistance.
It is difficult to name a single government-led major IT project that has worked. I guess the same is true for the private sector but they are much better at covering up their errors.
Stephen Timms has been leading a one-person forensic enquiry into the government’s procurement programme for its new IT system. The government sidesteps most of his questions.
I put down a single question. For the new universal credit to work requires HM Revenue and Customs to supply real time wage information ie actual pay details to DWP so that the credit payment system can be related to last month’s earnings.
I asked the very simple question for the names of the firms participating in this sample, whether they include small and medium sized businesses, and whether the permission of employees had been gained for their pay information to be shared with another government department.
No part of the question was answered.
My guess is that what is happening is that we have a group of civil servants in HMRC who either can’t understand properly what building the new system entails, or are too frightened to share with ministers that all is not well on this front.
The political consequences of getting it wrong are horrendous. There will be mayhem in the House if MPs find out that many of their constituents are not getting the credit which will make up a very considerable part of their total income.
When such a mess-up occurred on a smaller scale with housing benefit changes, even the lady who was not for turning, turned pretty quickly to dump huge amounts of taxpayers’ money into the reform to buy off the anger of her backbenchers. Beware Mr Osborne!
I also question whether it is desirable to try and build a super single means-tested system. Surely the aim should be to try and build an economy where real wages take people above existing means-tested eligibility.
The moral case against means tests is that it creates the very dependency the government says it wishes to counter. People weigh up whether it will pay them to work extra time, get a qualification, gain a new responsibility or should their partner work? Under means-testing, it all too often does not.
Means tests have a similar morally corrupting effect on employers. Employers shape employment contracts so that they can maximise the effect of having people claiming means-tested assistance.
You cannot run a free society when both employee and employer efforts to make an economic success of their lives depend, not on their own efforts, but primarily on the benefit changes a chancellor announces in his pre-budget report.
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Frank Field is MP for Birkenhead and former minister for welfare reform
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I went to the Progress event in Westminster this evening (28th February 2012) – “A new economy: Do we need it and what would it look like?”
At question time, I stood up and said that, with regard to reform of the welfare system, I thought that there was one aspect of the present means-tested system that was evil, which was the extremely high marginal rate of tax and benefit withdrawal that occurs. Did the members of the panel agree? If so, what would they propose to do about it if they (ever) get back into power?
Clearly, with the latest research the Fabian Society has done, with the generalised moaning about the deficit (and, hence, a tendency to accept more means-testing) and with, I fear, the increasing lack of concern of the population for its contemporaries living in these islands, the Labour Party will have a problem working out its policy.
The panellists had little by way of answers to my specific questions, which easily get put into the too difficult category. One said that we want work to pay, with people in good jobs, and not tinker with tax credits. Another suggested that “welfare” was not a good word to use and that it should be split into specific components.
My own belief is that a solution can only come in the context of a re-think on what the aims and objectives of British Society should be. That need not occur in a sudden way, but, rather, through a lot of little steps that shift us in the right direction.
After the meeting, one panel member agreed with me that some benefits might reasonably become subject to tax (but they would need to be adjusted accordingly) and another thought that reluctance to work might be a localised phenomenon.
Anthony Sperryn
I agree. That makes two people. Also the first thing I’ve ever agreed with Frank Field on.
There is another worrying element to all of this which will be close to Frank’s heart and that is the creation of a single fraud investigation service, centrally controlled, driven by overly bureaucratic DWP policy and procedure, stifling local initiative and resulting in highly skilled local authority investigators becoming part of a centralised non responsive service. DWP and HMRC are blind to the diverse range of public sector fraud affecting a local community. The creation of a DWP led single service will do nothing to reduce wider public sector fraud losses.