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The implications of Universal Credit

What does this system of benefits really mean?

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Image Credit: Paisley Scotland

The new system rolled out in October 2013 under the coalition Government, representing an ardent desire to simplify the current system and streamline it to make it more cost effective. After all, the Department for Work and Pensions hires the most employees of any other UK Government organisation, including the Ministry of Defence and that of Justice.

Universal Credit has rolled six separate systems of benefits and tax credits into one; including Housing Benefit, Child Tax Credit, Income Support, Working Tax Credit, Income-based Jobseeker’s Allowance, Income-related Employment, and Support Allowance. It works by taking the different benefit claims and servicing monthly payments (biweekly in Northern Ireland).

However, there have since been many claims that its aim is to reduce payments, leaving some on the brink worse off. With reports that a UN poverty envoy claimed the UK Government has inflicted “great misery” on its people with “punitive, mean-spirited, and often callous” austerity policies last year.

He went on to say that in the UK “poverty is a political choice. The figures themselves are staggering as the Institute of Fiscal Studies report that around a fifth of the UK population live under the poverty line, and it is predicted that by 2022 child poverty will rise to 40 per cent.

This is by no means to say that Universal Credit has solely engineered these changes, for many of the austerity policies doled out after the Global Financial Crash were very harsh and focused on cutting benefits. But austerity has been widely suggested to have worsened the state of the UK economy since the 2008 crash, as economic theory (and was successful for many countries who applied it during this period) suggests that governments should actually increase spending during a recession rather than cutting it.

In short, though the idea to streamline the benefit system had a lot of merit, in practice it would seem as though, like many of the policies in the last few years, it costs the poorest of the population the most, some of whom are already on the breadline.

Only recently the Universal Credit system has hit headlines again after the UK Government dismissed claims that it was plunging hundreds of families into poverty. This was despite a report by the Institute for Fiscal Studies finding that around 1.9 million people will be £1000 poorer every year compared to the previous system.

A spokeswoman for the DWP later attacked the report saying: “This report wrongly assumes that everyone was claiming their full benefit entitlement under the old system, which they weren’t because the system was overly complex”.

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