We can’t speak for other enthusiasts for the free market economy – including Allister Heath, our columnist Ryan Bourne, and John Redwood – who urged unprecedented state intervention when the pandemic broke. (As we did: the economy was undergoing the equivalent of a heart attack, and needed emergency surgery urgently.)
But we believe that they also knew well that, when it comes to the expansion of government, it’s easy in, but not easy out. Of which the Universal Credit uplift is providing a classic illustration.
The Benefits Uprating Order is being considered in the Commons this week, but a decision on the uplift’s future has been postponed. Ministers are telling Conservative MPs that “a decision regarding its future will be made in due course…it is only right that we wait for more clarity on the national economic and social picture before assessing the best way to support low-income families moving forward”.
On the one hand, that is not a principle that has been applied to other benefits. On the other, Universal Credit, though paid to some people who don’t work as well as to some who do, is becoming the main employment-related benefit.
In the summer of 2019, 33 per cent of those receiving Universal Credit were in employment, and 41 per cent were in the Searching for Work conditionality regime. That snapshot from before the arrival of Covid-19 gives a sense of what the payment does and where it was going.
But pandemic has exploded figures like those. At the start of the pandemic, about three million people were claiming Universal Credit; now, that figure has all but doubled. Unemployment has already hit five per cent, or 1.7 million people.
However, this uncertainty isn’t the main reason for the delayed decision on uprating. The driver of the pause is an institutional clash between the Treasury, the guardian of the public finances, and the Department of Work and Pensions, the steward of what goverments used to call the social security system.
Rishi Sunak has floated one-off payments to keep down costs to the taxpayer (or such has been the briefing); Therese Coffey has said that these are not her “preferred approach” (no briefing here: she said so publicly last week to the Work and Pensions Select Committee).
She can point to Universal Credit as one of the Government’s pandemic success stories – the main one, arguably, before the vaccines came along. As Iain Duncan Smith wrote on this site, “on the old system, these claimants would have to be processed physically ,and the queues and chaos at job centres would have dwarfed anything we have seen so far, as well as increasing infection rates”.
It can be argued that the payment does not target our poorest people. Philippa Stroud, formerly Duncan Smith’s adviser when he was Work and Pensions Secretary, has put that case.
“The Government could decide to focus on those who are moving in and out of poverty and close to the labour market (the top seven million). That is in effect what the £20 uplift has done in Universal Credit. Or, it could decide to focus energy and resources on those in deep poverty – those who are 50 per cent below the poverty line (bottom 4.5 million),” she wrote on ConservativeHome.
“This is the most vulnerable group and where I would put my energy and effort at a time of national crisis.” However, the poorest are not necessarily those who have been hit hardest by Covid.
Stroud is now at the Legatum Institute, and a recent report from the think tank found that “poverty has reduced among some groups…this is because many non-working families have seen their benefits increase, meaning that they are less likely to be in poverty than would have been the case in the absence of the Covid-19 pandemic.”
The story of the Coronavirus continues and all judgements must be provisional. But our take on the virus so far is that manual workers, younger people, women, and a section of the self-employed have been disproportionately affected in economic terms.
A substantial slice of these are the battlers, strivers and just-about managings of electoral legend. And the number of them on Universal Credit has soared – as we have seen. They will be well represented in the Red Wall and other former Labour seats in England’s provinces in which the Conservatives did so startling well at the last election.
The debate that Stroud wants about anti-poverty policy is made harder, she argues, by the absence of an offical measure of poverty – abolished in 2016.
“We are allowing others to create a narrative for us, and in the absence of an agreed poverty measure and subsequent strategy, we always will,” she says. She champions a new measure from the Social Metrics Commission which she has helped to drive; the Centre for Social Justice disagrees, arguing for a focus on outcomes that reduce family breakdown, addiction, worklessness and poor schools instead.
We wrote yesterday that if Boris Johnson wants to take healthcare policy left (which Ministers are denying), Parliament will probably let him do so. It may be a different matter with the Universal Credit decision.
Our sense is that Conservative backbenchers, as so often, will be driven by their constituents’ immediate needs, first and foremost. Maybe there is some one-off compromise – the Prime Minister’s reflex will be to hunt for one – that involves some new scheme, such as that floated by the Centre for Policy Studies.
But it is hard to see how the Government can avoid running the uplift for another year: the alternative of doing so for a few months, which would do little if anything to abate the political pressure on Ministers, doesn’t look appealing.
We end where we began. Once benefit payments have been raised, it is difficult to cut them. The conventional means of establishing control is either to freeze their value, or replace them altogether – while getting more people into work. That’s part of the recent story of benefits, through Peter Lilley’s reform of incapacity benefit under John Major to the Employment Support Allowance of the Labour years.
So much for the short term. What about the medium? Is the divided backbench reaction to Marcus Rashford’s campaigning the shape of things to come, with Tory MPs taking a less stringent view of welfare than during the years of much higher employment?