It seems another age but there was a time when the commentariat hailed George Osborne as a political genius. That was in the early years of the Coalition government of 2010, but after some ham-fisted budgets and an ill-conceived EU referendum campaign (Osborne was the mastermind of the Remain effort) opinions have been revised drastically downward. Unfortunately it may be that Osborne’s worst legacy is only now slouching into full view. For it was Osborne who torpedoed the chance that Universal Credit – a decent-minded proposal to better the lot of the worst off – would succeed.
Universal Credit (UC) was the brainchild of Iain Duncan Smith, who experienced a light bulb moment back in the mid Noughties when he educated himself about the reality of the problems facing the poor. He identified what he termed the “benefits trap” whereby people had their money docked if they began to earn through work.
Duncan Smith, the first, and so far only, Catholic leader of the Conservative Party, decided that the benefits system should be redesigned in such a way that poor people would be tempted back into work. They would be allowed to do some paid work without suffering any withdrawal of their benefits. The great prize, as IDS saw it, was that people trapped in idleness, living on state handouts, could be coaxed back into productive labour.
As part of this humane and practical re-imagining of the system (which David Cameron broadly supported) Duncan Smith decided that the plethora of benefits (housing support, tax credits, social security etc) should be amalgamated into one consolidated benefit to be called Universal Credit. It would, he claimed, be simpler to understand and administer.
IDS did not pretend the new system would save money. In fact, initially it would cost more – but the long-term prize of fewer people consigned to everlasting state dependency would, he thought, eventually save money as well as delivering inestimable personal gains in terms of self-worth and dignity to individuals.
So much for the vision. Enter, stage right, Osborne, Gradgrind calculator in hand. In his post-election summer budget of 2015, and in the name of austerity, the then Chancellor took a wrecking ball to the carefully constructed edifice of UC. Whereas the original concept would have allowed a single person to earn £111 a month without loss of benefit, Osborne reduced that figure to zero. for a lone parent, the rate was to be reduced from £734 to £397.
These swingeing reductions were applied to every category of claimant. At the same time Osborne insisted the first UC payment would not be paid for six weeks. The overall effect of his changes was to save a bit of money but make the new system much less generous.
On a purely political level Osborne’s manoeuvres had consequences: IDS used the mauling his plans for UC and benefits for the disabled had received as the pretext for resigning from the Cabinet in the run-up to the EU referendum (a move which undermined Cameron and boosted the Leave campaign). More importantly, Osborne’s economies hit the poor hard.
In 2009 I helped set up the Oxford Food Bank, a charity which collects surplus food from supermarkets and wholesalers and distributes it to other charities. That work brought me into contact with a network of local charities, and from 2016 the charity bush telegraph began signalling that the six-week delay was having disastrous consequences. Many of the poorest in society have never mastered those basic life skills which keep the wolf from the door: saving, budgeting, long-term planning and so on. They are, in other words, the people least able to weather an interval when there’s no money coming in.
Predictably the casualty rate is rising. Last month the Citizens Advice bureau in Oxford called for the implementation of UC to be delayed because so many people are getting into severe financial difficulty.
Homeless Oxfordshire, a local charity that runs a hostel for homeless people, has witnessed an upsurge in rough sleepers in the city. It would be wrong to ascribe that increase solely to UC – but at least some of these people are casualties of a system which can leave individuals unable to pay the rent.
The result is that the government is facing a politically toxic backlash as people twig what is going on. Since 2002, when Theresa May casually labelled her own tribe “the nasty party”, the Tories have been neurotic about how they are perceived by the voters. That is what drove the so-called modernisers like Cameron and Osborne.
Iain Duncan Smith’s vision of a benefits system that was humane and generous, but not over-indulgent, was exactly the sort of policy that might have confounded critics. It’s deeply ironic then that Osborne’s narrow parsimony should give ammunition to those who think all Tories are wicked and selfish.
Osborne, the political sophisticate with the Midas touch in reverse (everything he touches turns to dust), could well be the man who costs the Tories the next election. For by prioritising saving money he has damaged a well-meant reform and given the voters another reason to doubt Conservatives when they claim to be on the side of “ordinary people”.
Robin Aitken is a journalist and author
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