An alternative vision of genuine social security for all

Instead of ‘cracking down’ on claimants, goverment should move everyone onto universal credit

Last week, the government announced that it would be cracking down’ on people who spend too long on universal credit (UC) looking for a job. Its Way to Work’ scheme will mean that people will be expected to look for roles outside of their previous occupation or sector earlier on in their UC claim, or face potential sanctions.

The announcement seemed to be as much about signalling a tough stance as it was about evidence-based policymaking. As commentators were quick to point out, people who are able to find work quickly already tend to do so. When people stay on the benefit longer it is often because of additional barriers that the threat of sanctions are more likely to exacerbate than address.

If people are just pushed into any job going, they are unlikely to find the work appropriate and fulfilling and may well end up back on UC before too long, possibly less motivated and mentally healthy than before. It also means that there is little pressure on employers to provide good wages and conditions to attract potential employees.

The government wants to portray UC as a last resort that people should only need for short periods of unemployment. However, the reality is that many people struggle to find secure work, and even those in employment often still need UC to top up their income. Worse still, many people don’t take up support from UC even though they are eligible – either because of a lack of awareness, difficulties applying, or the stigma associated with benefits.

In a new report that I co-authored with the New Economics Foundation (NEF), we’ve set out an alternative vision of genuine social security for all. It starts with getting support to everyone who is eligible by auto-enrolling us all onto UC. Just as tax is taken automatically from our earnings, support could kick in as soon as our income drops below a basic level. The steps we set out in the report to achieve this would help to destigmatise benefits, reduce the administrative burden of applying for support, and cut the time people have to wait for payments.

We suggest that a basic UC profile’ should be set up for everyone whose details are held by HMRC, and that people should be encouraged to provide any additional information needed for a full UC​‘account’. Earnings data from HMRC could then be used to trigger UC payments if someone’s income drops below a level that entitles them to claim the benefit.

We also argue that UC payments should be unconditional, so that people aren’t threatened with destitution through benefit sanctions if they fail to meet Jobcentre requirements. People should be supported and encouraged to work, not coerced. This would effectively create a Minimum Income Guarantee, the level of which would vary depending on people’s circumstances.

In addition, we’ve refreshed a previous NEF proposal that would see the personal allowance of income tax replaced with a Weekly National Allowance – a non-conditional weekly payment of £47.30 to all adults earning less than £125,140 (since those earning above this level do not get a personal allowance in the current system). The reform would effectively take around £8bn currently spent on tax allowances for the highest income third of families and redistribute this across the remaining two thirds, with gains concentrated among the 10% lowest income families.

With the financial security our proposals provide, people would have the space and time to find work that they want to do

These proposals would reshape the current benefits and tax systems to build a foundation capable of eventually delivering a Living Income for all: a bold new way of doing income support that would set an income floor below which no one can fall. The report sets out costings to fund an auto-enrolled version of UC at its current rates, but over time these rates and the Weekly National Allowance could be increased to a point that no one can fall below the Minimum Income Standard for a basic standard of living, as calculated by the Joseph Rowntree Foundation.

With the financial security our proposals provide, people would have the space and time to find work that they want to do, providing impetus to drive up wages and the quality of work in the UK. Employers, with support from the government, would need to respond by ensuring jobs are attractive and fulfilling. The cost of the measures we propose could be fully funded by reducing undesirable tax allowances and reliefs, particularly on income from wealth such as capital gains, dividends and savings.

The longer-term benefits we’d expect to see — a healthier and happier population and a higher-wage, more productive economy — would build the case for further investment to take us towards a guaranteed Living Income. If this is the kind of future you want to see realised, then please have a read of our report, let us know what you think, share it with others, and sign up for updates on NEF’s living income campaign.

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