Universal Credit nears end amid sickness claims surge

Source: bbc.co.uk

TL;DR

• Iain Duncan Smith's 2002 Easterhouse visit sparked Universal Credit to simplify benefits and make work pay.
• Health-related claims now near half of incapacity benefits, with spending forecast to hit £100bn by 2029.
• Government plans cut health top-ups while raising basic allowances to push more into work amid rising graduate unemployment.

The story at a glance

Universal Credit, born from Iain Duncan Smith's 2002 visit to deprived Easterhouse, nears full rollout after delays and cost overruns, but faces new challenges like surging mental health claims and 700,000 unemployed graduates. The government calls the system one that "encourages sickness" and plans reforms to shrink health top-ups and boost basic payments. This comes as the benefit supports over eight million, with critics highlighting debt traps and inadequate Jobcentre support.

Key points

• Easterhouse in 2002 epitomised welfare traps with poor housing, gang violence, and hopelessness; Duncan Smith's Centre for Social Justice (CSJ) pushed Universal Credit to merge six benefits into one monthly payment that tapers earnings gradually.
• Rollout is nine years late and hundreds of millions over budget; previous Tory policies cut workless households by one million since 2010, per 2019 government claims.
• Mental/behavioural incapacity claims rose from a quarter to nearly half since 2002; 700,000 graduates now claim benefits, up 46% since 2019 (CSJ data).
• Five-week wait for first payment forces advances repaid from future benefits, linking two-thirds of Citizens Advice debt clients to food bank use.
• Basic allowance seen as too low, creating "perverse incentive" for health claims adding £423 monthly; government paper notes this traps people out of work.
• Upcoming changes: basic rate up 6.2% in April then annually to £427 (today's prices) by Parliament's end; new health top-up halved to £628 from £823.
• Jobcentres criticised as compliance-focused with short appointments; pilots like "Jobcentre on Wheels" aim to improve access.

Details and context

Universal Credit aimed to fix old system's complexity where "you needed a maths degree" to see if work paid, per CSJ's Joe Shalam; it restores incentives but sits amid benefit freezes, rising food bank use, and low standard rates like £317 for under-25s.

Reforms target a "new reality" of mental health dominance in claims and graduate joblessness, with health/disability spending jumping from £65bn now to £100bn by 2029. Halving health top-ups for new claimants seeks to keep more on employment paths, but Labour MP Debbie Abrahams warns it risks deepening poverty for the genuinely ill.

Access to Work scheme, aiding disabled employment, faces backlogs despite rising demand; ministers push employer funding for adaptations to ease taxpayer burden. Jobcentre reforms address views of them as "punitive," with mobile units expanding from pilots.

Key quotes

• "A system which encourages sickness" – government description of current welfare arrangements.
• "You needed a maths degree to work out whether you were better off moving into work under the old system" – Joe Shalam, CSJ policy director.

Why it matters

Welfare costs risk ballooning amid mental health claims and youth unemployment, testing if Universal Credit can adapt to make work viable without trapping people in dependency or debt. Claimants face tighter health eligibility and Jobcentre pressures, while low-paid workers and firms hiring disabled staff navigate shifting incentives and support access. Watch reform impacts on new claimants and backlogs clearance, though pilots and projections like IFS calculations leave outcomes uncertain.