We're used to politicians excusing their swingeing cuts to Social Security with the line that they're reforming the system and 'making work pay' and understandably the arguments about this tend to focus on the 'tapers' used to diminish benefits as 'excess income' increases. For all their promises of reform, the present Government's tinkerings have actually made the tapers steeper for Tax Credit claimants, taking more earned income away faster and thus making work less likely to 'pay', but that isn't what I want to look at now.
One of the big claims for Universal Credit is that it 'makes work pay' by offering generous disregards on earned income - a 'disregard' being the sum you can earn before benefit is affected, for the uninitiated - than are currently allowed, so helping to 'make work pay'.
At present, earnings in excess of £5 per week are lost penny for penny, pound for pound if you are a single person receiving any of the means-tested subsistence benefits such as Income Support or income-based Jobseekers Allowance, and at 65p in the £1 for housing benefit. This rises to £10 per week for a couple, with a range of slightly more generous disregards for lone parents and disabled workers, plus a miscellaneous collection of share fishermen, part-time fire-fighters and other worthy souls.
One of the overlooked iniquities of the current system is that most of these disregards have remained unchanged since Income Support was introduced in 1988. At that time, the 'applicable amount' for a single person over 25 was £33.40, with a £5 disregard on any net earnings. Someone in the same position now would have an applicable amount of £71.70, but still a £5 disregard on their net earnings. While benefit rates have increased by 215%, the main disregards haven't moved at all. Had they risen in line with benefits, the basic disregards would now be £10.75 for a single person, £21.50 for a couple - more than twice the actual rate.
Which brings us on to consider whether the reform to end all reforms, the much-hyped but largely hopeless Universal Credit, offers more than the so-called 'legacy system' with which we're familiar.
Doing a very simple comparison with the current disregards, in most cases the 'work allowance' for UniCred (as it will be known when Newspeak becomes our official language) is substantially higher even than the old disregards increased in line with benefits. It's a close-run thing, though, for the childless couple - an equivalent calendar monthly disregard of £93.16 compared with £111 work allowance. Not that this guarantees anyone will really be better-off in work - Citizens Advice and others did lobby successfully for fairer allowances for childcare costs, but these still don't meet the full cost, and travelling expenses are not disregarded - even though Jobseekers will be expected to take up work with a 90 minute one-way travelling time. But in fairness, the current system also fails to allow fully for childcare and travel.
But before we give grudging thanks to IDS et al for these work allowances, a note of caution. There is no regulation to increase them year on year, just as there wasn't with the old 'disregards'. So while it might look fabulously generous that a 'hardworking family' might earn £500 or more a month without their benefits being reduced (if they don't need help with housing costs, that is), we should ask ourselves if that figure will look as benevolent in 2040.
After all, they might actually have introduced Universal Credit for all by then...
