Dani Garavelli: Fresh look at Tories' Universal Credit crunch

Last Sunday, Theresa May made an audacious pitch for disenchanted Labour voters. 'You are not bound by ideology,' she told those 'moderates' who are less than overjoyed by the prospect of a Jeremy Corbyn-led government. 'It is time for you to look at our party afresh.' There followed some disingenuous bluster about the Conservatives offering a 'positive and optimistic vision' and the promise that the end of austerity was nigh.

Twenty-two charities have been gagged from criticising Esther McVey over Universal Credit . Picture: Jack Taylor/Getty

It was nonsense, of course. As any fule kno, this government is as far from representing the working classes as Tommy Robinson is from representing Muslims. But just in case any lost Labour voters might be delirious and find themselves inadvertently straying into the Tory camp, Esther McVey, secretary for Work and Pensions, did the right thing and took time out to remind us just how many f***s the government gives about society’s poorest (answer: zero).

As John Major warned Universal Credit might prove to be May’s “poll tax”, McVey finally admitted some people in receipt of the new six-in-one benefit could be worse off. Asked about reports (allegedly confirmed by her to the cabinet) that three million people on working tax credits would lose up to £2,400 a year, she answered only that the government had been forced to make some tough decisions, but that those affected would be fine because they would make up the lost income through work.

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McVey stands almost alone in her view that all manner of things shall be well, largely because she enters a state of denial whenever anyone warns her of impending disaster. That’s what she did last year when the National Audit Office (NAO) issued its damning report on the impact Universal Credit was having on the 850,000 people who were then claiming it. It said 40 per cent were in financial difficulty, 20 per cent were not paid in full on time, and 25 per cent said they couldn’t make an online claim. The NAO also said there was no evidence Universal Credit would reduce unemployment or result in administrative savings – both key objectives of the original plan – before going on to concede that, after eight years and a £1 billion of investment, there didn’t seem to be a practical alternative.

But what McVey heard, and relayed to parliament, was that the NAO thought the roll-out should be speeded up. She also suggested the report was based on outdated statistics. So brazen was her behaviour, that the comptroller and auditor general, Sir Amyas Morse, felt compelled to write an open letter correcting her mistakes. She later apologised for the statement on speeding up the roll-out, but did not resign.

Now McVey faces a chorus of warnings: from those who have suffered as a result of the problems with Universal Credit, from opposition parties and from those within her own party who can see the storm heading their way.

One of the prophets of doom is Iain Duncan Smith, the architect of Universal Credit, who resigned as Secretary of Work and Pensions after the then chancellor, George Osborne, slashed disability benefits. Duncan Smith wants the £2bn Osborne plundered from the Universal Credit scheme to be replaced by scrapping plans to raise the tax threshold.

Major is another critic. Demonstrating the gulf between the Toryism of the 1990s and now, he has pointed out that leaving vulnerable people worse off might offend a civic sense of fairness and be the government’s undoing. Which is quite a thought given the mess it is making of Brexit.

Other backbench MPs fear the policy will cause problems in their constituencies. Nigel Mills, a member of the work and pensions select committee, said the government should slow down the roll-out. And Johnny Mercer, MP for Plymouth, described the scheme as politically “undeliverable” although he blamed “bad press” and a “politically driven fear” which encouraged people to dismiss it as a failure before it had even been tried. Mercer also suggested that frontline workers were broadly positive about the scheme, only to have some of those frontline workers take to Twitter to deny this.

Charities contracted to get unemployed people into work are in an ideal position to witness any dysfunctionality as the mass migration of existing claimants begins in July next year. That will be why 22 of them have been forced to sign a gagging clause which prohibits them from saying anything that might tarnish McVey’s reputation.

Other charities, such as Mind, oppose the scheme because they know how many people with physical and mental health problems have died while trying to claim Universal Benefit; they know that the demand on food banks goes up whenever it is introduced in a new area; they know the anxiety and despair it is causing so many people.

For its part, the SNP has branded Universal Credit “not fit for purpose” and called for urgent changes, including the restoration of the original work allowance and the lifting of the benefit freeze.

The Labour Party too has been unstinting in its criticism of the policy, with former prime minister Gordon Brown saying that unless the roll-out is halted the country faces a “summer of discontent”, and party chair Ian Lavery warning of more suicides. Within the past couple of days, scrapping the benefit, as opposed to pausing and fixing it, has become official Labour Party policy.

Despite all this pressure, the Prime Minister still appears wedded to the idea. A spokesman for the government said: “Universal Credit is based on the sound principles that work should always pay and those who need support receive it.”

She may eventually cave in, at least with regards to scrapping the rise in the tax threshold and replacing the missing £2bn, but, if she does, it will be because of the work of opposition parties, trade unions, charities and those Tory MPs who have spoken up.

As everyone outside the inner core of the Conservatives looks on aghast, May must be delusional – or think others are – to dream that a single Labour voter would drift in her direction. Those who are disaffected with Corbyn may crave a more centrist approach, but they’d surely never be misguided enough to believe that a party that has wrought such misery for the most vulnerable in society could ever provide an acceptable alternative.