THE REVAMP OF THE BENEFITS SYSTEM

By Viraj Mehta

Theresa May has unveiled her plan to change the benefits system of the UK. She feels that it has become easy to take advantage of and more money should be spent on the NHS. Therefore, she has replaced the system with Universal Credit, which is, in simple terms, a circumstantial benefits system, where all types are clumped together. However, short trials have shown that this system has some disadvantages, and people have to wait a lot of time to get their payments. So, what is the prime minister trying to achieve with Universal Credit?

Universal Credit is a single universal benefit payment which is paid directly into the claimant’s bank accounts. The previous benefits which are merged together are income support, jobseeker’s allowance, employment and support allowance, housing benefit and tax credits. The claimants have to then pay rent and expenses from that. The benefits are still means-tested, meaning that the money that one person gets can be different to the amount of money other people get, because it depends on the circumstances of the person. For example, if a single unemployed mother wants to claim benefits, they can claim child tax credits, jobseeker’s allowance, income support allowance etc. However, if a working man without a child who is struggling to pay a mortgage wants to claim benefits, he may only be available to claim housing benefits or possibly income support allowance too. Another new plan is a reduction in benefits allowance as one earns more, they receive less money in benefits. The quoted figure, as per BBC News, is a reduction of 63p in benefits for every £1 earned after tax.

However, when the government trialled the policy earlier this year, they received some shocking results. There were some principal flaws with the time it took for the claimants to receive their payments, some taking more than 6 weeks. The worst affected was the housing benefit allowance, as some claimants had to show tenancy agreements in order to receive benefits. This took a long time for some people as they had to hand it in and get validated. Another new feature, called advance payment, which is when claimants who are in desperate need of payments in order to live, and so the government gives them more money in advance. There were problems as the people who needed it couldn’t access it. Therefore, they could not pay for the essential fuel and other necessities.

Universal Credit is quite taxing, for the government as well as it is seven years in the making and it still has not been perfected. The project has cost a lot more and has obviously taken far longer. The National Audit Office has said that Universal Credit was "driven by an ambitious timescale" and suffered from “weak management, ineffective control and poor governance". Hence, the plan Theresa May is putting forward is not effective and should be postponed, until further trial runs take place.

To summarise, Theresa May is making a mistake by putting forward this plan for Universal Credit, as Ian Duncan Smith formerly said. It is a waste of the government’s money which they could use for the NHS and other more urgent issues. In these turbulent economic times, now is not the time for Theresa May to start a new benefits policy. What should be in Universal Credit’s place, should be a continuation of the current benefits system. However, there are some advantages to Universal Credit, namely the vast number of people it will help.

References:

https://www.economicshelp.org/blog/7067/economics/universal-credit/

http://www.bbc.co.uk/news/uk-41487126