Universal credit: Meeting the needs of capitalism

The latest budget confirmed that welfare ‘reform’ will continue no matter which party comes to office after the general election. Chancellor George Osborne wants to slash another £12bn from welfare in the next parliament while Labour’s Shadow Work and Pensions Secretary, Rachel Reeves, says ‘we’re not the party to represent those who are out of work’. On this we can agree. As the radical social affairs blogger Johnny Void recently pointed out, the levels of sanctions against JSA claimants is only now reaching the levels of the final months of the last Labour government, which saw 52,399 sanctions inflicted in March 2010 alone.

Universal credit (UC) marks the coalition government’s flagship reform of the social security system. UC will see six existing benefits and tax credits* integrated into a single means-tested payment for both those in work and out of work. The government White Paper Universal Credit: Welfare that Works says UC will create ‘a leaner but fairer system … that is integrated and explicitly focused on ensuring that work always pays. It will substantially reduce poverty, and as well as being fairer, the system will also be firmer. The links between benefit payments, earnings and tax will in turn make the system more secure from fraud and error, and conditionality will push people to do as much work as is reasonable for them.’ All the main political parties support UC and regard it as progressive. Any criticisms focus on its shambolic implementation and fears some vulnerable people may lose out.

The purpose of UC is to change the provision of state welfare to meet the needs of capitalism in 21st century Britain. By extending ‘conditionality’ to those already in part-time work, universal credit will see millions more workers thrown on to the labour market and forced to compete for jobs, depressing wages for the whole working class. ‘Conditionality’ is the strict regime of unpaid ‘workfare’, daily sign-ons, job searches, ‘training’ and other humiliating and socially useless conditions which claimants must meet as their punishment for being unemployed. Under the current system only unemployed claimants are under this discipline. Universal credit extends this regime to low-paid workers already in part-time work and each member of a couple with children.

One of the principal consequences of this is that it massively increases the available pool of flexible workers. Under the current system, working even a few hours of waged labour will see nearly all the cash gain swallowed up by reductions in for instance housing benefit. With universal credit, benefits are withdrawn at a ‘smoother’ rate, ‘making work pay’ and ensuring part-time workers and unemployed claimants take up any available work, no matter how limited, short-term or badly paid. At the same time it will make the conditions of current workers even more insecure. As the DWP wrote in a release to employers in February, UC will have ‘a positive effect on your business’ as more jobseekers will be ‘willing to consider short term or irregular work’ and will allow you ‘to identify opportunities for flexible working using your existing part-time employees’.

Universal credit is calculated by starting with a claimant’s maximum UC allowance then deducting additional income. The ‘carrot’ of UC is that, unlike the current system, claimants will be allowed to keep 35 per cent of any income from waged work. The ‘stick’ is the increasingly brutal sanctions which will remove benefits if the stringent conditionality regime is breached. Benefit sanctions are already having a devastating effect on claimants. UC is set to make the sanctions regime even harsher, with the minimum sanctions period raised to four weeks, and up to three years for repeat ‘offences’. Crucially, the DWP confirmed in February that part-time workers judged to be doing too little to find full-time work face having their benefit sanctioned for the first time.

At the same time as creating a massive, casualised labour force, harassed and sanctioned by the state at every turn, UC has another target. Those deemed incapable of being made productive will face a direct, material loss of income compared to the current benefits system, in particular those who are seriously disabled. According to a Citizens Advice report, the Children’s Society and Disability Rights UK, UC will halve support for families with disabled children; couples where both partners are disabled will lose £100 a week. Save the Children’s End Child Poverty report estimated that 150,000 working single parents already below the poverty line will be further impoverished by the UC changes.

It is unclear whether universal credit will ever be fully implemented. It is beset by massive overspend and incompetent management. Nonetheless, the ruling class is committed to the UC vision of a low-wage, casualised working class, divided, disciplined and constantly faced with the threat of starvation if it steps out of line. Welfare ‘reform’ is an attack not just on those out of work but on the wages and conditions of the whole working class. It must be resisted in its entirety.

Joey Simons

* The six benefit and tax credits merged into universal credit are: income support; income-based Job Seekers’ Allowance; income-based Employment Support Allowance; housing benefit; child tax credit; working family tax credit. Community care grants, crisis loans and council tax benefit are being abolished and replaced with local authority schemes outside of universal credit. Disability Living Allowance for adults is replaced by Personal Independence Payments.

Fight Racism! Fight Imperialism! 244 April/May 2015


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