Why Universal Credit needs reform

Housing associations, councils and charities are all saying the rollout of the universal credit is a disaster in slow-motion.  Payment delays of six, eight or sometimes ten weeks are causing people serious financial problems.  Many families feel forced to choose between not paying their rent, not eating or taking payday loans or similar which can lead to spiralling debt.  Changes to Universal Credit are causing this hardship.  It comes down to government penny pinching.  The rollout of Universal Credit should be stopped until its problems are solved.

Universal Credit was supposed to fix problems like the benefits trap.  The Lib Dems supported it because we care about helping people on low pay.  Under Labour, people could be worse off if they worked more than 16 hours a week, because they would lose more in benefits than they would gain in earnings.  They could also be worse off by working at all, rather than staying on benefits.  It was absurd and we wanted to fix it. 

Universal Credit combined unemployment and in-work benefits.  It meant people could move between unemployment, temporary, part time and full time work without having to cancel one benefit and apply for another.  It was designed to make people better off the more they worked.  But in 2015, when the Tories won a majority government, they cut billions of pounds from Universal Credit.  Their changes caused the current problems.

Before Universal Credit, people could lose £1 of their benefits for every extra £1 they earned.  They would be no better off for working longer.   Universal credit has ‘taper rates’ which allow you to keep a portion of your benefits as you work more.  Tory cuts slashed this to pennies.  People working more hours a week can be just a couple of pounds better off.  It ruined the entire principle behind Universal Credit - to make work pay fairly; a principle the Liberal Democrats care deeply about.

The Lib Dems are calling for the Universal Credit rollout to be stopped until its failings are fixed.  Payment delays must be stopped.  Allowances and taper rates must be put back.  Only when universal credit gets back to easing poverty should the roll out continue.

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