Universal Credit needs £2bn extra says Iain Duncan Smith

The UK government must pump £2 billion into welfare in this month's Budget to save its flagship Universal Credit reform, Iain Duncan Smith has said.

The architect of the troubled Universal Credit system quit in 2015 over billions being cut from the new benefits scheme.

Criticism of the welfare overhaul, which is currently being rolled out nationally, has grown following reports that the Work and Pensions Secretary Esther McVey told Cabinet colleagues that claimants could lose as much as £200 per month in benefits.

Mr Duncan Smith said topping up funding was the only way of reaching the “just about managing” people that Prime Minister Theresa May had promised she would help.

Iain Duncan Smith.

He said in a TV interview: “Theresa May stood on the steps of Downing Street and said, ‘I want to look after those who are just about managing’.

“Universal Credit is the single best system to get to those who are just about managing.

He added: “The key thing is, the structure works, but we need to put the money in … if we do that and get the money back to where it should be, the reality is nobody should lose at all.”

SNP deputy Westminster leader Kirsty Blackman called on the Chancellor to halt the scheme when he delivers the Budget at the end of October.

She said: “Millions of families have suffered from years of failed Tory austerity cuts that have seen real wages fall, social security payments slashed, living costs rise, and the majority of families left poorer and worse off than they would have been a decade ago.

“The Tory government’s record on living standards has been utterly miserable – with rising poverty and inequality, and plans for an extreme ­Brexit that it knows will deliver a body blow to incomes and living costs across Scotland and the UK.”

Shadow attorney general Baroness Chakrabarti said the UC name was now a “toxic brand” and it would be “very hard to rebuild trust in it”.

She said: “The problem with Universal Credit now, is, under this government, it is being used to cut people’s benefits – to penalise people for having too many children, to penalise the disabled and other vulnerable people. The notion of a simpler benefits system – great idea, but not if you are adding austerity to it.”

Speaking on the BBC’s Andrew Marr Show, shadow foreign secretary Emily Thornberry called for a root and branch review of Universal Credit.

Ms Thornberry said former chancellor George Osborne had used UC as “a vehicle for cuts because it’s so complex you could introduce a whole load of cuts and nobody would notice”.

She added: “We must not come out of austerity on the backs of the poor. This is wrong, it’s fundamentally wrong.”

Speaking on the same programme, Health Secretary Matt Hancock defended the system, saying: “I have seen the Universal Credit in operation in my own constituency, where I have had no letters [about problems] on it at all.

“I have sat with the work coaches meeting people who are on Universal Credit and seen how the way that it works means that people can be helped into work much more.”