Universal Credit and HB cuts: something for something?

What price Universal Credit? If today’s reports are to be believed at least £10 billion more than previously assumed, as this is the size of the upcoming welfare cut the Department for Work and Pensions has agreed to accept in exchange for the Treasury’s support for Universal Credit.

It’s been known for a while that the Treasury is nervous about the Department of Work and Pensions’ ability to pull off the ambitious Universal Credit programme. Rumours of delay, IT risks, cross-government communication breakdown and budget problems worry many in Whitehall and beyond. But now the Treasury has promised to support the difficult birth of Universal Credit in exchange for Iain Duncan Smith’s acceptance of an additional £10 billion in benefit cuts.

Cross coalition support for further cuts now appears likely, on the condition that higher earners share part of the pain. As politics it might work, but I’m yet to meet a landlord who will waive a housing benefit shortfall because the family across town are paying extra stamp duty.

Once again housing benefit is first in line for the axe, despite £2 billion already being cut from low income renters. For the third time this year the Conservatives have called for a ban on under 25s receiving housing benefit. No concessions have been offered that stop this being a major blow to younger households needing a safety net.

Ministers insist that young people should live with their parents, but that’s not an option for those whose parents have died, divorced or downsized, been abusive towards them or simply don’t have the room. It’s also terrible for the job prospects of those for whom moving back in with family would mean living miles away from job opportunities.

It also paints a slightly misunderstood image of young people: over half of under 25s on housing benefit have children living with them. This policy isn’t about managing the expectations of ‘school leavers’ (as one newspaper headline termed them this morning); it’s pulling the safety net out from the one in four children born to a younger mother.

Shelter, like other charities, has gone from welcoming the intent of Universal Credit in principle to nervously monitoring DWP’s ability to deliver. In theory the new benefit will simplify the social security system and improve work incentives, both noble aims. But the need for savings and the decision to localise council tax benefit have already weakened work incentives, the push for sanctions and conditionality on part-time workers is worrying at a time of under-employment, and ‘simplification’ pursued too narrowly sits poorly with the complex realities of people’s lives.

The merits of Universal Credit diminish further if its offers only a narrow safety net that excludes many hard working families. Hitting young families at the very start of their working lives, and at a time of record youth unemployment, seems particularly cruel. Pulling the safety net out from people taking their first steps on the housing and employment ladder risks pushing them down never to recover; and then how will they become the strivers that Ministers rate so highly?