Apparently, the Work and Pensions Secretary has threatened to resign if the Chancellor cuts the new benefit.
Universal credit was launched by Mr Duncan Smith with great fanfare in 2013, combining previous means-tested benefits such as jobseekers allowance, tax credits and housing benefit into a single payment which is currently being phased in across the country.
It is a controversial scheme, not least because it makes the assumption that benefit need is uniform and not specific to circumstance such as mental health. Universal Credit will mean people with mental health issues will no longer have their claims supported by a specialist health assessment but instead through meetings with a general job centre work advisor.
Such a move is likely to be detrimental to those with mental health issues as they are often the least likely to be picked up in a general assessment by an unqualified advisor. There is no system in place at job centres to provide such professional advice. It is already clear from those on the Work Programme that it is making their health issues worse. The DWP refuses to reconsider the impact of the new assessment on those with mental health issues. They wish to remain blind to the problem and ignore the concerns expressed by organisations such as the mental health charity MIND.
Universal benefits has some cross party support, but the devil is not so much in the detail but in the purpose. I am always wary of the all embracing reason given for changes in benefit that it is 'to make work pay'. What that translates into is more people being forced into low paid, insecure jobs. We create a cycle of 'dependency' - locking people into low pay jobs.
Nonetheless, the Work and Pensions Secretary is concerned that change in universal credit, particularly if it affects the tapering of the benefit will mitigate its intention. Currently the taper is set at 65% – meaning that for every extra £1 claimants earn above a threshold, they lose 65p – but Osborne is looking at a proposal to increase this to 75%.
But all this begs the question wether there should be cuts in benefits at all. The government says it is necessary to 'cut the deficit', but if that is so then why did Osborne cut tax on beer? If he intends to cut the deficit then revenue should be considered. The stated imperative of cutting the deficit is not consistent with cutting such taxes. It was a cynical move to win votes.
The government argues that the benefits bill is 'out of control', but you can't have a system designed to 'make work pay' and then grumble about the cost of it. The cost is increasing because too many people are pushed into low pay.
The best way of tackling the benefits bill is to increase pay. Duncan Smith was delighted by Osborne’s decision to announce a national living wage in the summer budget, and famously responded to it with a double fist pump in the Commons. For once I can agree with him that a move to a genuine living wage is what is necessary to lift people out of poverty and benefits.
We need a budget for growth not a budget that hurts the poorest. We need a budget that encourages proper contracts and skills, not one that pushes hard working people deeper into poverty. We need a budget that tackles the cost of housing, a major factor in poverty, and a major hindrance to jobs.
It is time the Chancellor understood you can't cut your way out of a crisis - crisis of his own making. But you can stimulate real economic recovery and productivity growth, creating more jobs and rejuvenating many areas of industrial decline.
Lifting people out of poverty with decent wages and jobs is economic sense. Pushing more people into poverty is economic madness.