So 2 Million People Will Lose Out On Universal Credit. And, So What?

Much huffling about this new estimate of who will lose out from the switch to Universal Credit. As many as 2 million people will lose some £1,000 a year off the amount they get from sucking at the state’s teat. And?

That’s the thing here, so what?

What we’re supposed to assume is of course that this is awful. Which is to make a terrible logical error:

Almost 2 million people will lose more than £1,000 a year following the switch to universal credit, with those claiming disability benefits the worst affected, according to research by a leading thinktank. Self-employed workers on below average incomes and low-income families with little savings will also be among the biggest losers, the Institute for Fiscal Studies study concluded, as the government aims to complete one of the biggest overhauls of the benefits system since the introduction of tax credits in 2003.

The error being, well, what do we have that tells us that the previous level of teat sucking was the correct one?

Or, to be less inflammatory about the question, what tells us that the amount of welfare benefits, tax breaks and credits, that welfare support for the poor, was the right amount to be offering?

Sure, it’s entirely possible that it was too little. If you think that there should be no relative poverty at all then obviously it was. Relative poverty being living in a household with less than 60% of median equivalised income – usually after housing costs. Myself I don’t give a rat’s buggery about that sort of poverty. It’s also true that a large chunk of British such poverty can be explained by London. That’s part of the Great Global Economy and has pay rates to match. Also costs to match of course. Other areas of the country are a pretty mediocre Northern European economy with pay and costs to also match. But we measure our median income as a national one. If we moved to consideration of regional pay and costs then much of the UK’s divergence from the more usual relative poverty levels for Europe would disappear.

And let’s be honest about it, that Londoners make more and also pay £5 a pint, not £3, isn’t a signal of some great economic or social injustice.

Equally it’s possible that that previous amount was just right. Or, of course, that it was too high. It’s worth noting that unemployment pay alone – that £73 a week or whatever it is these days – puts you into the top 27% of all global incomes. Yes, that’s after we take account of differing living costs across geography. Given how history has worked that puts you well into the top 50% of all human incomes ever. That’s before we talk about housing benefit, tax credits, child benefit and long before we add in free at the point of use health care, education and so on.

Hey, sure, apply your prejudices as you wish to this very point. But don’t fall into the trap being laid here. The assumption being made is that any lowering of social support from what it used to be is an outrage, a crime against humanity even. But we really don’t have any evidence at all to tell us that the previous amount was the correct one. Thus the new one being lower cannot be assumed – as it is – to be some heinous awfulness.

That Universal Credit will provide a little less nourishment from that state nipple is not proof perfect that Universal Credit is a bad idea. For there is that possibility that the taxpayer should be milked a little less, no?

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Jonathan Harston
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Jonathan Harston

The evidence that should be used that Universal Credit is a bad idea is the implementation. It’s always an attractive option to chop the old system out and replace it wholesale – cf Hard Brexit – but I would have done it piecemeal, as I would rewire a house or rewrite software – take over old services one by one, removing the old bits as you go when the new bits work. Just like with the parliamentary boundary review. Reduce the HoC size *and* tightening up quotas both at the same time. Pick one, do that, then later do the… Read more »

Matt Ryan
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Matt Ryan

Actually its the Soft Brexit approach of trying to keep aligned that has left us in the current SNAFU.

Sometimes you do have to throw away the old. Especially if it’s grow all sorts of appendages over time which can’t (within a reasonable timescale or cost) be trimmed back.