Alistair Carmichael, MP for Orkney and Shetland, has today warned the Secretary of State for Work and Pensions that the Government’s underfunding of Universal Credit could undermine the whole purpose of the benefits reforms.
In July 2015, then Chancellor of the Exchequer, George Osborne, cut Universal Credit funding, resulting in the Government removing working tax credits, a policy which makes the transition between benefits and work more smooth. The Government has since been forced to offer more transitional funding, but this only exists until 2023.
Speaking in the House of Commons, Mr. Carmichael said:
“One of the fundamental principles of Universal Credit was to design a welfare system where people would always choose to be in work. Now the money that the Chancellor took out in 2015 fundamentally undermined that principle. Will the Secretary of State speak to the Chancellor of the Exchequer about restoring work allowances to the levels originally planned?”
Responding on behalf of the Government, the Secretary of State for Work and Pensions, the Rt. Hon. Esther McVey MP, said:
“I am sure that the Rt. Hon. Member will not be surprised to know that, of course, I have been having discussions with the Chancellor, and we will all know what those discussions have been two weeks to this very day.”
Commenting, Mr. Carmichael said:
“The Secretary of State’s coy answer will do little to reassure the millions of households across the UK that are suffering as a result of mistakes made in the Universal Credit process. The cuts that the then Chancellor made back in 2015 have left around 3.2million households on average, £50 a week worse off. A large number of those households are struggling families with children.
“Ministers need to learn from what we have seen in the roll out so far, and admit that is some areas, they have not got it right. By returning the work allowances to their original levels for families with children, 9.6 million parents and children would be able to keep more of their own money.
“Work is the best route out of poverty, and universal credit was intended to facilitate that. At the moment, it is doing the exact opposite, locking more working families in poverty. If the Chancellor takes no action in the budget in two weeks’ time, then the warnings from John Major and Gordon Brown that Universal Credit could become Theresa May’s poll tax look increasingly accurate.”