15 years on, it’s time we made universal credit the game changer it can be 

Back in November 2010, one of the biggest shake-ups of our social security system in decades was announced. Universal credit would completely replace six legacy benefits, creating millions of winners and losers as almost seven million households were set to move on to the new combined benefit.

It was so big that the switchover was originally expected to take until 2017 to complete. It turned out that was nowhere near enough time. Now 15 years on from the original announcement, we expect the last people on legacy benefits will finally move to universal credit by spring 2026.

Universal credit had two main objectives: to simplify the system and ‘make work pay’. These led to some positive changes. For example, claiming support via a single benefit simplified access to a range of help for people with different needs.

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Recent research by the Joseph Rowntree Foundation (JRF) and Scope found that the rise in health-related benefit claims since 2019 (when universal credit became available for all new claims) might partly be explained by people with health conditions finding it simpler to access the extra support they need within universal credit. More people getting the support they’re entitled to is a good thing.

However, there was a glaring missing objective from universal credit from its inception: to address poverty. This, together with people with direct experience of poverty lacking a say in its design, helps explain some of universal credit’s flaws.

For example, having to wait five weeks before your first payment would not be part of a system that reflects the reality of living with no money. Advance payments were offered to help people through the wait, but these are just loans. The repayments then get deducted from people’s monthly universal credit, leaving even less to live on.

A system designed to address poverty would also surely not have allowed the situation we see now, where five in six low-income households on universal credit are going without essentials like food, heating or toiletries.

Losing your job, needing to care for a sick family member, breaking up with your partner – these things can happen to any of us. We can’t always deal with what life throws at us on our own, which is why universal credit should, at the very least, protect us from going without essentials. 

Instead, at just £92 a week, the basic rate of universal credit (the ‘standard allowance’) has fallen by 9% in real terms since 2010 and is well below the £120 that JRF’s research indicates a single adult needs to afford essentials.

In fact, many people are surprised to hear that universal credit’s basic rate is not calculated according to people’s needs or the cost of bills. Today’s rate is simply the result of a long, historical series of rate changes, sometimes based on inflation, sometimes frozen, often simply based on the political considerations of the day. 

Fifteen years on, it’s time to update universal credit to address these flaws and make it the poverty-fighting system it could be. To start with, the government should explicitly make tackling poverty one of universal credit’s core objectives. Two bold system changes would then follow.

First, there needs to be a clear minimum level inserted in the system. This would prevent deductions, such as those resulting from the five-week wait or the benefit cap, from pulling people’s universal credit payment below this protected ‘floor’ level.

The government could use the coming budget to effectively create such a floor, at relatively low cost. A protected minimum floor 15% below universal credit’s current basic rate would directly target hardship and lift 130,000 people (including 80,000 children) out of poverty immediately.

Second, universal credit rates should at least be based on a logical calculation of living costs. Instead of simply uprating last year’s arbitrary amount each year, we need an independent process to recommend rates that reflect what people need. This should draw on evidence of what things cost, including insight from people with direct experience of having to get by on a low income.

These are the building blocks of an essentials guarantee within universal credit, which would ensure everyone has a protected minimum amount of support to afford essentials. Such changes would help set universal credit on a better course for its next 15 years and give us a social security system that we can all rely on in difficult times.

Iain Porter is senior policy advisor at the Joseph Rowntree Foundation.

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