Professor Peter Taylor-Gooby comments on the admission by the government that the flawed Univeral Credit rollout has led to an increase in the use of foodbanks in the UK.
‘Amber Rudd has now accepted the evidence provided by Trussell Trust, Joseph Rowntree Foundation and many others that the rollout of Universal Credit has led to such severe poverty that there has been a rapid increase in the use of food banks.
‘She now faces a dilemma: to reform Universal Credit so that claimants are treated more humanely or to revert to the previous system. The new Universal Credit system is attractive in principle. It simplifies means-testing enormously and makes it possible to develop a benefits system that doesn’t damage incentives by cutting benefit income immediately if anyone earns a small amount more. It is not possible to reform it in a way that will stop the increases in poverty without spending more money.
‘Similarly the existing messy and inefficient system is also bringing more and more people into poverty. Again the only solution is to increase spending. But where will that money come from? The coalition Conservative/Liberal and Conservative governments have cut spending on short term benefits by nearly 25% in real terms, compared by what it would have been, since 2010. Current Treasury plans demand further cuts. Almost all economists agree that Brexit will undermine growth, at least in the short term.
‘As such Amber Rudd’s dilemma has no solution without higher taxes and higher spending, and this is difficult to imagine given the pressures from Brexit. However, with the Joseph Rowntree Foundation, using official data, estimating about a third of British children are brought up in poverty and the number is rising all the time, the need to act is imperative.’
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