Dr Rita Griffiths is Research Programme Lead for the IPR.
What will the future hold for universal credit (UC) in 2017? Its rollout to date has largely been restricted to single applicants, many of whom have no housing costs because they are still living at home. Next year, UC will be increasingly extended to couples and families with children whose needs and circumstances will be considerably more complex, thus presenting the policy – and the households receiving it – with many more challenges to negotiate.
This expansion will begin to test more rigorously the extent to which UC’s much-lauded real-time information system is genuinely fit for purpose. Some predict this will be the policy’s ultimate downfall – the system will collapse under the weight of administrative complexity, unable to cope with fluctuations in earnings and the messiness of people’s lives and changing circumstances. This may well be UC’s destiny. A not dissimilar fate awaited the first incarnation of tax credits, working families tax credit. Introduced in 1999, it underwent radical reform barely three years after implementation due in large part to the inability of the system to respond flexibly and fast enough to people’s changing circumstances.
However, another no less significant design flaw lies waiting in the wings: the removal of the administrative distinction between being in and out of work. Unlike the current tax credit system, entitlement to UC for working people begins with just a single hour of work. By linking means-tested financial help to earnings rather than hours worked, this design feature is intended to smooth the fluctuations in income arising from movements into and out of employment, with the aim of reducing financial uncertainty and risk when people make the transition from benefits to work – an admirable goal. The system has also been deliberately designed to ensure that unemployed people and those working only a small number of hours will always be incentivised to work more – a similarly laudable objective (though justifiably not without its critics, given the risk of simply oiling the wheels of an increasingly casualised labour force).
Merging in-work and out-of-work benefits into a seamless, unified system may seem like an elegant policy but the problem is that the trade-off needed to achieve it involves extending the reach of Universal Credit further and deeper into the working population than any other social security system or earnings top-up scheme has ever ventured – anywhere in the world. An estimated three million low-income working households – the very hard working and ‘just about managing’ families that Theresa May’s government is meant to be helping, and who would formerly have remained outside the system of behavioural conditionality – will be drawn into its unyielding embrace.
With entitlement to UC comes a new raft of mandatory obligations. Work conditionality will be extended to low-paid working adults and their partners for the first time. Those whose earnings fail to reach the minimum earnings threshold – equivalent to 35 hours’ work at the national minimum wage for single adults and both members of a couple with children over the age of 11 – will be required to attend mandatory Jobcentre Plus meetings where they must demonstrate they are actively seeking to find more hours, better-paid work, or a second job. Only designated carers of children under the age of one will be exempt from this. Fines and sanctions for non-compliance accompany these rules. For couples, the hours of work, earnings and compliance of one partner will crucially affect the conditionality requirements imposed on the other.
While, therefore, it is legitimate to challenge claims of ‘simplification’, promoting ‘independence’ and ‘making work pay’ as hubris, we should not be lulled into thinking UC is simply old wine in new bottles. Make no mistake: in-work conditionality really is new and different. Crucially, it turns on its head the policy intent of working tax credit, designed as remuneration and a reward for work rather than a state benefit. Paid directly into the wage packet via the employer, the aim was precisely to avoid state interference in family life and to distance the payment from the stigma attached to claiming out-of-work benefits. No one yet knows how the requirement to attend mandatory jobcentre meetings, work longer hours or get a second job will be greeted by people who are already working, or the female partners of low-earning men who would prefer to stay home to look after their children. Randomised control trials currently underway are shrouded in secrecy, and with good reason if media reports of a working mother sanctioned for going on holiday are to be believed.
Only time will tell, but my prediction for 2017 is that without a radical rethink, current proposals for in-work conditionality may well prove to be Universal Credit’s undoing.
This article originally appeared in edition 23.3 of Juncture, IPPR’s quarterly journal of politics and ideas.