Iain Duncan Smith’s plan to streamline our benefits system is practically unachievable
At the weekend, 70 organisations raised concerns about the introduction of universal credit, Iain Duncan Smith’s flagship welfare reform project. It is not so much whether millions of claimants will be unable to fill out a universal credit claim online – the issue that has so far occupied the anti-poverty lobby’s mind. It is, rather, whether those applying for help will have an income they can sustainably use, as the credit will pay benefits at monthly rather than fortnightly intervals, as at present.
We will have the opportunity to debate these issues in parliament tomorrow, but it is clear that there are fundamental problems with universal credit. The new payment, due to be fully delivered by 2017 and initially set to cost £2bn more in benefits annually, aims to sweep together the main means-tested benefits and tax credits into one “universal” benefit. Instead of having a number of Gordon Brown’s different tax credits, there will be one benefit – at least, that was the idea. The government has had to admit defeat on this front, as only six benefits and tax credits are now being merged. The universal credit will also taper gradually, thus supposedly overcoming the disincentive to work embedded in the current benefits system.
I disagree. Means-testing only encourages dependency, and the universal credit is, in one sense, the ultimate form of means-testing. It obviously gets extra money to hard-working families who earn low wages, but in doing so it rots the soul. Recipients have to be saints not to take the loss of credit payments into account when deciding whether to work longer or to train for a more highly paid job. At present, claimants can lose more than 90p for every extra pound in earnings. Under universal credit people can still lose about 65p of every extra, hard-earned pound – 20p more than the highest rate of tax.
I am, therefore, against universal credit in principle, but also fear the programme is practically unachievable. Rumour has it that the prime minister does too, hence the attempt to move IDS to the justice department in the reshuffle so that the plans could be shelved.
The project has already been delayed owing to IT problems. Last year a leaked report highlighted concerns from the IT industry itself that the timescales involved were unrealistic. I fear the department is burying its head in the sand because the risks are so great.
Having been refused access to the Risk Register, I have now asked the National Audit Office to carry out a special enquiry to see whether the known risks have been countered or if they are likely to overwhelm the whole project.
My understanding is that problems are continuing to mount up. Can HMRC collect real-time information from PAYE records? Leading civil servants working on the project have left their posts and HMRC is, apparently, refusing to share the pilot results with the DWP, despite claiming that all is well.
Can anyone remember – with the exception of the pension credit – a satisfactory introduction of a new state IT project? Remember the tax credit disaster in 2005? The Child Support Agency has had three new IT systems and none of them has worked properly. The UK Border Agency’s new e-Borders programme, costing so far at least £1.2bn, will not be able to count migrants in and out of the UK until 2015 at the earliest, despite having been commissioned back in 2003. Yet none of these failures equalled this project in terms of scale or complexity.
It was brave of IDS to insist on occupying the command on the bridge, but it was the prime minister’s wish to avert a catastrophe that drove him to try to move his work and pensions secretary so that the government could quietly shut down the whole reform. His failure to act leaves the disaster on course.
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