What is it?
Universal credit is a monthly payment which is available to people on low or no income in place of six former means-tested benefits. Its staggered implementation began in 2013. It is designed to be a simpler and more agile alternative to the former system, encouraging people to get into work. Universal credit, like all welfare payments for the unemployed, should be there not as a way of life, but as a net to catch you if you fall off the ladder of employment, before nudging you back into work. I shall argue that that is exactly what universal credit does.
Work always pays with universal credit
Universal credit is a nimble and versatile solution; it ensures that it always pays to work; with universal credit you are never worse off in work than out of work, as was often the case under the former system, where the replacement ratio at times was often witnessed to be over 100%.
Moreover, it avoids the cliff edges at 16 and 30 hours that existed under the old system; people were formerly constrained from working over 16 hours, as doing so would normally result in a loss of all welfare income: a situation in which one could be made worse off by working more. With universal credit, that is no longer the case: rather, more work unfailingly pays under universal credit; instead of penalising people for working by reducing payments in line with the number of hours worked, with UC, for every marginal £1 earnt, welfare payments decrease by 63p. As a result of this consistent rate and system of arrears, cliff edges are avoided, and UC adapts around work; it is paid in arrears, and so employment-centric with money paid based on the money earnt in the last month, instead of a cynical view of the month ahead. This is particularly pertinent to the gig economy (with more flexible hours) and should ultimately lead to full time work.
Employment rate since 2010
It is a fact that’s often ignored, but it’s still definitely worth noting that since 2010, unemployment has fallen by over 3.5% and is now at its lowest level since 1975. This is no small achievement, and is a great testament to the introduction and progress of universal credit since 2013. There does not seem to be any alternative to universal credit which would conceivably have as positive a track record in the medium-term.
Facilitating Social Mobility
By helping to get more people into work more quickly, as well as genuinely incentivising them to work, UC also facilitates social mobility: it helps the unemployed to gain work, and those on low incomes to take on additional work, thereby earning more money from it). Thus, people can thrive and flourish, and potentially gain new heights of prosperity in the medium to long-term, albeit with the prerequisite of persistence.
Adjustment and Responsiveness
In should certainly be notedthat UC is a new system: as a result, as well as being versatile, it must beresponsive to experience. As a result, the DWP’s incremental implementation as well as Esther McVey and now Amber Rudd’sassurances that the government will listen, and make Universal Creditresponsive and versatile still. Amber, it can be seen, has already fought to ensure concerns are addressed, and will doubtless continuedoing so.
Overall, whilst the virtues of universal credit are patent, difficulties persist and the system is not perfect at this stage. But it is not worth turning our backs on it at this stage due to all the good it has already helped to achieve. But we must continue to listen to concerns, and ensure that it continues to evolve with our rapidly changing economy.