Why the referendum has killed Universal Credit

It now seems that Scotland will get control of at least some of, what are now, national benefits. In particular it seems that Housing Benefit will be devolved to Edinburgh. According to the BBC, on the morning of the result, the Tories and Labour have agreed on this while the Libdems have not.

The move seems, in some ways, to be logical. The very similar Council Tax Reduction scheme has been devolved to Scotland already and, administratively, it would be a relatively simple undertaking.


What does this mean for Universal Credit?

UC is meant to be a universal ‘one benefit fits all’ for working age people; originally Council Tax Benefit was meant to be included as well – which would, as an aside, have been much better than the current mess. Pulling rent support out of it would be a serious dilution. Pulling it out only in Scotland would be difficult, confusing and add considerably to the IT woes of the project.

There are more fundamental problems though. Rent is integral to much of the UC scheme.
To point to only one, the variable levels of earnings disregards in UC depend on the rent element in the calculation. Reintroducing multiple tapers in different means-tested benefits will make things very difficult technically, more complex for claimants and a nightmare to administer. A mix of weekly and monthly benefit cycles, minimum notional income in some of them and the necessity to separately consider the needs of children and disability in each scheme will be ‘interesting’ to say the least. Not just with homes but in tech and business the risk management cycle is something that is extremely fragile and has to be taken care of.

Even if it works, socially, benefit tourism might become attractive if a bedroom tax exists outside Scotland and the rent caps and overall benefit cap may add to the differential between nations.

If it works is the big question though. My own feeling is that it will make Universal Credit unworkable, driving a rethink of the future – or provide a much sought for excuse to exit the mess.

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One Response to Why the referendum has killed Universal Credit

  1. I totally agree with you Gareth. It is remarkable that the Scottish Referendum has been going on for two years and this bribe to “No” voters turns up in last few weeks. If IDW and David Freud were to be believed and UC was ever on time and on budget, then the bibe would never have made its way on the table. This suggests to me that David Cameron and senior cabinet members do not have any faith that UC will be delivered. It also suggests that keeping Scotland in the Union is more important than reforming welfare to IDS’ vision. That begs even more questions about who will suffer worse if Scotland leaves. The Scottish poor and vulnerable or the English/Welsh poor and vulnerable? While some (not I) might suggest that would be the Scots, I would suggest whatever the result the English/Welsh will take the brunt of consequences.

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