Universal credit - Labour MP warns of 'disaster'

The government's flagship welfare reform programme is heading for "disaster", its "poverty czar" Frank Field has warned.

Writing in The Guardian, the Labour MP says Universal Credit will not simplify benefits as planned and will instead "rot the soul" of the low paid.

Mr Field - a previous supporter of some coalition welfare reforms - also predicts new IT systems will not work.

The scheme's architect Iain Duncan Smith will be quizzed later by MPs.

The work and pensions secretary has worked with Mr Field in the past on coalition welfare policy - but the Labour MP's stinging criticism of Universal Credit adds fuel to growing criticism of the scheme.

Mr Duncan Smith robustly defended it in the Commons on Monday, telling MPs: "Universal Credit is on time, on budget and I particularly want to stay here to see that through."


He is understood to have refused to be promoted to justice secretary in last week's Cabinet reshuffle, after reports the Treasury wanted to axe Universal Credit over fears costs and complexity were spiralling out of control.

The Universal Credit aims to sweep away the complex system of tax credits established by Gordon Brown and replace them with a single payment.

But in his Guardian article, Mr Field says: "The government has had to admit defeat on this front, as only six benefits and tax credits are now being merged."

He told BBC News there had been an "exodus" of senior civil servants from Mr Duncan Smith's department and the government was refusing to publish the results of a pilot study of the Universal Credit by Revenue and Customs.

He said he feared a repeat of the previous Labour government's "much more modest" attempt to simplify benefits which he claimed was engulfed by "chaos" when new IT systems did not work properly.

He told BBC News: "It looks to me as though this is a project heading for disaster and I am anxious, at the end of the day, that we don't have a disaster and we don't have poorer people being treated as they were in 2005, when the great day arrived and the system didn't work."

Mr Field, who made his own attempt to reform the welfare system as a minister in Tony Blair's first year in office, angered some Labour colleagues by agreeing to draw up a report on welfare reform for David Cameron.

In his Guardian article, he takes issue with the central claim made for Universal Credit - that it will make work pay by removing disincentives.

Mr Field argues that the way Universal Credit payments will gradually "taper" as claimants' wages increase, represents "the ultimate form of means-testing".

"It obviously gets extra money to hard-working families who earn low wages, but in doing so it rots the soul," says the Labour MP.

"Recipients have to be saints not to take the loss of credit payments into account when deciding whether to work longer or to train for a more highly paid job."

He says he is "against universal credit in principle" but also fears that it has become "practically unachievable".

"Rumour has it that the prime minister does too, hence the attempt to move IDS to the justice department in the reshuffle so that the plans could be shelved," adds the Labour MP.


He says he has asked the National Audit Office to carry out a special inquiry into the universal credit, amid fears it will be derailed by over-ambitious IT changes.

And he says the prime minister's "failure to act" by moving Mr Duncan Smith to another cabinet post "leaves the disaster on course".

The government have rejected suggestions that new computer systems to administer the Universal Credit will not be ready in time, saying most of them had already been built and were being tested.

The Universal Credit will replace jobseeker's allowance, tax credits, income support, employment and support allowance - formerly known as incapacity benefit - and housing benefits.

It will be "piloted" in parts of the north-east England next April and will come into force nationally for new claimants from October 2013. Existing claimants will be transferred to the new system in stages until 2017.

HMRC insists the pilot of the computer system that will underpin the Universal Credit is "on track" and "going very well".

In a statement, HMRC said: "HMRC is working very closely with DWP which includes sending them daily updates on the RTI (Real Time Information) pilot. RTI is on track and the pilot is going very well.

"We started the pilot in April with just 10 employers and now we've successfully received over 1.9 million individual records from over 1,300 PAYE schemes." 


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