The former minister who oversaw the introduction of universal credit has called on the government to maintain key benefit increases introduced during the pandemic, lamenting that it had taken a global health crisis for the welfare system to be provided with adequate funding.
In a rare interview, David Freud, regarded as the architect of the controversial benefit, told the Observer he battled against “massive cuts” demanded by the Treasury and had considered resigning.
The Tory peer said an increase in housing allowance during the pandemic must now be maintained. He added that ministers should also rethink plans to cut, from September, the £20 a week added to basic payments. “When you’ve got lots of people who are not normally in the welfare system needing to subsist, the rates aren’t good enough,” he said.
Some Tory MPs already think the government is heading for major fallout if it cuts universal credit in autumn, just as the furlough scheme ends and the pandemic’s real effect on the economy begins to emerge. A recent survey also suggests there is widespread public backing for making the £20-a-week universal credit increase permanent.
Freud was speaking ahead of the launch this week of his book Clashing Agendas, which documents years of battles with the Treasury and crises in the introduction of universal credit, which replaced a range of benefits and tax credits. He said that as well as repeatedly demanding cuts, the Treasury wanted to use universal credit to claw back money overpaid by mistake. This left thousands of claimants with unexpectedly low monthly payments.
“It was a part of the deal,” he said. “The Treasury said, ‘you can have universal credit, but we want to use it as an efficient debt collection device’. And, of course, it is very efficient. I think it’s counterproductive: it undermines universal credit. I wish we hadn’t had to agree to it.”
He said universal credit’s reputation had been repeatedly damaged because then chancellor George Osborne had combined its introduction with huge savings. “By the time we’d gone through the coalition period, all the cuts that were reasonable, and extra ones, had been done,” he said. “I think it was a mistake, particularly from 2015, to go on with this massive cuts programme.”
He questioned Labour’s pledge to replace universal credit, as starting again would be hugely difficult. “I can imagine a savvy political party putting a bit more money in the system and rebranding it – but I can’t see it changing to a genuinely new system.”
A government spokesperson said: “Universal credit enables claimants to support themselves and their families, helping them to move back into work, allowing them to increase their hours and supporting them towards financial independence. When the chancellor announced the six-month extension to the uplift, it was clear it was a temporary measure to support households affected by the economic shock of Covid-19.”
