Compassion or Brexit: the choice facing Britain’s Conservatives

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Compassion or Brexit: the choice facing Britain’s Conservatives


It may, of course, just be coincidence, but you cannot help noticing that the most devoted champions of universal credit, the UK’s big bang welfare reform, are also the most dedicated Brexiters. There was always a touch of the “with one bound we were free” mentality about both ideas. It is the allure of the deceptively simple.

There are arguments to be made for UC, but the implementation has been hopeless. Again, one can see the Brexit crossover. It just needs to get past the tricky implementation stage. We cannot let a few obstacles stop us. Great British ingenuity will iron out the details. There may be trouble ahead, but while there’s music and moonlight . . .

This is not to suggest that grandiose ideas are the exclusive preserve of rightwing anti-Europeans. Until recently, the big bold bang school of politics belonged more to the left and also to pro-Europeans. Until Thatcherism, major upheaval used not to be a very Conservative thing. One also has to allow that some grand visions turn out to be good ones; the National Health Service is Britain’s best loved example. These are exceptions. Mostly, there is a lot to be said for dull, incremental advances.

The case for UC is not terrible. Its creator, Iain Duncan Smith, welfare secretary under former prime minister David Cameron, argued as early as 2009 that the system of multiple benefits was complex and off-putting and that disincentive led to entirely workless families. New incentives to work for even a few hours would encourage good habits and set claimants on a path to more, he said.

This is not an absurd idea, although it is not clear the system was in such a mess as to require so comprehensive a shake-up of in-work benefits.

So UC was born; six benefits rolled into one. This was a reform entirely motivated by good intentions — truly compassionate Conservatism. Even better, its success would cut welfare bills.

Eight million people will ultimately receive this benefit, which ought to be incentive enough to get the detail right. Instead, it was beset by IT and other failings. It is badly behind schedule — even at best estimates it will have taken at least a decade. It is also unlikely ever to reap the promised cost savings.

The financial crash meant that reform was introduced in an era of austerity. George Osborne, the former chancellor, used the unrealised and illusory efficiency savings to cut £12bn from the welfare bill. Only £3bn of this was a direct hit on the funding for UC, but the scheduled unification means much of the £12bn will fall on the new benefit. This led to the first crisis as payment delays left people without support for up to six weeks. Even with transitional payments, 20 per cent are not getting their money on time — and 7m are still to migrate to UC.

More importantly, the savings undercut a basic principle of the reform by forcing a cut in the hours people can work before they start to lose benefit. Studies suggest up to 2m people could lose about £48 a week. The figures are aggregate — but that is a heck of a lot to anyone on UC. No one moving to the new benefit will be worse off on day one, but they will lose cash if any of their circumstances change.

Some Tory spending hawks want to see the welfare bill cut. They see in-work benefits as state subsidies for low pay and believe people can live too well on them. The political problem with this view — leaving aside the moral one — is that in-work benefits now reach a significant percentage of the population and these people cannot be dismissed as the “shirkers” of Tory mythology. Many are the very hard-pressed working families prime minister Theresa May has pledged to help. These are people whose votes the Tories need for power, so chancellor Philip Hammond will be forced to find the additional money.

All of which leads to the final point. Grand projects cannot exist in a vacuum. Both universal credit and the Osborne cuts predated Brexit. But a scheme the size of UC ought to be the biggest project on the government’s books. Right now it is not even close.

The prime minister has promised an end to austerity. Conservatives are loudly willing the end without the means. It is hard enough for the chancellor to salvage UC, hold down taxes and eliminate the deficit in any climate; all but impossible in the teeth of a Brexit-induced recession. Yet those making the loudest demands on the chancellor are often, though not only, the same ones advocating the hardest of Brexits. Money may not be everything, but it is if you haven’t got it.

Ideas are only ever as good as their implementation. It is a curious kind of compassion which tries to alleviate poverty while insisting on a course which may well deny the nation the funds to turn that ambition into reality.

robert.shrimsley@ft.com



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