Universal credit 'sinking fast'

Government plans for a universal credit to overhaul the benefits system is a "flagship that is sinking fast", Labour has claimed.

It is an "open secret" in Whitehall that the policy, which aims to bring most benefits and tax credits under a single payment, is headed for the rocks, shadow work and pensions secretary Liam Byrne claimed in the Commons.

He said Labour wants the idea of the universal credit to work but the Department for Work and Pensions (DWP) is in chaos and the policy is being delivered with incompetence.

Work and Pensions Secretary Iain Duncan Smith, who turned down a reshuffle offer from the Prime Minister to become Justice Secretary in order to implement the universal credit, insisted to MPs that delivery of the plan is on time and on budget.

Opening an Opposition Day debate on the policy, Mr Byrne said: "We do want universal credit to succeed. It is now however an open secret in Whitehall that universal credit is a flagship which is sinking fast. We need answers to a host of questions about universal credit. We cannot help get this vital project back on track unless you come clean about exactly is going on."

He said apparent problems with the credit involve its costs which the DWP itself told the Office for Budget Responsibility (OBR) have spiralled by £3.1 billion. The issues with the budget mean there are question marks over the value of tax credits and free school meals, meaning people could in fact end up better off quitting work, he said.

Mr Duncan Smith said the universal credit policy is on track and will be delivered as planned. he said: "You are wrong. We are not over budget on the programme and we are not out of time. Both are proceeding much as the plans we had laid. The report (to the OBR) was actually looked at as a possible end position but it was looked at by the OBR, who are independent, well before we even completed the stages of the legislation which was going through both houses.

"This was done in July of last year. Since then we have had a series of discussions with them, we have looked at the modelling in detail and, as far as they are concerned, we are progressing in the right direction. We are committed to the £2.5 billion per year."

Labour's former welfare minister Frank Field feared the Universal Credit would be "a disaster" and said some benefits claimants would not want to work, regardless of the shake-up to the system. He said MPs "deluded themselves" if they believed the "whole body of people who are registered as never working since they left school are eager to get a job. They are not".

Mr Field, MP for Birkenhead, claimed means tests "rot the soul of individuals" and demanded "the most fundamental change in the welfare state from a means tested one which is where we meet people's needs to what it was originally envisaged - a welfare state in which people draw benefits because of the contributions they make, either in work or in a wider sense to the community".