Financial forecaster says discredited welfare reform might bring in NO taxpayer savings
It is a policy which has caused widespread misery – and has plunged a million children into poverty.
But Universal Credit (UC) has been revealed as a failed project which might not even save the taxpayer any cash.
A bombshell report from the Office for Budget Responsibility (OBR) shows that the UK Tory government’s flagship welfare reform policy is set to deliver marginal – at best – savings.
The forecaster said that the cuts inflicted on people through the roll-out of UC might save £1 billion by the time the much-delayed system is completely rolled out in 2022.
However, even these savings could be off-set by ministers being forced to reverse some of the unpopular and damaging cuts.
UC rolls up six working-age benefits into one payment – including tax credits, housing benefit and jobseeker’s allowance –but it has been savaged by charities and campaigners who say that flaws in its implementation, and crucially the benefit cuts which have come with it, have caused misery, homelessness and hunger.
The OBR report states: “The move to Universal Credit has been – and remains – an enormous design and delivery challenge for the government, notably the Department for Work and Pensions (DWP). The rollout has already been delayed repeatedly. And Universal Credit is now designed to save money, relative to the legacy system it replaces.”
It adds: “A welfare reform of this scale and nature is a source of significant risk to the Treasury in terms of public spending control.”
The OBR report has led Scottish charities to again call for a halt to UC.
Peter Kelly, director of the Poverty Alliance, told TFN: “This is yet more evidence, if it were needed, that the UK government needs to heed the calls of campaigners and halt the roll out of Universal Credit.
“It is, of course, no surprise that the OBR has found that UC will make only marginal savings for the UK government.
“The promise of UC was that it would not leave people worse off, but the evidence is clear that this is not the case. The pain and distress that the new system has brought will never be worth the savings that may be made. The UK government needs to stop and think again.”
John Dickie, head of the Child Poverty Action Group in Scotland, said: “"There have been huge cuts to Universal Credit and families - mainly those working - are set to pay for those cuts. Average losses are £960 per year for couples or an alarming £2,380 for single parents.
“CPAG analysis shows that across the UK these cuts will put a million extra children into poverty. Yet despite all the damage and upheaval, and the assurances that the benefit is on track, Universal Credit is actually bringing minimal savings to the public purse – just £1bn. It also brings at best a slight improvement in people’s chances of working, despite this being one of the central aims of the programme.
“The OBR’s findings raise serious questions about whether Universal Credit in its current form is viable. Yet half our children will be in a household dependent on it so we have to fix it or set it aside.
“This month’s scheduled pause in the roll-out of universal credit should be extended for a fundamental review of the benefit. If that doesn’t happen, there’s a risk that all this policy will roll-out is poverty.”
Marion Davis, head of policy at One Parent Families Scotland, added: “The rollout of UC has caused untold anxiety, stress and poverty for many single parent families. As well as a posing a “significant risk” to public spending this has also risked the wellbeing of single parent households.”