◼ ECONOMICS Bloomberg Businessweek September 23, 201933PHOTOGRAPH BY GARETH IWAN JONES FOR BLOOMBERG BUSINESSWEEK
THE BOTTOM LINE A badly executed consolidation of welfare
payments, together with austerity measures, has increased
hardship for many of the U.K.’s most vulnerable citizens.A decade back, Asheem Singh was a senior
researcher at the Centre for Social Justice, the
London-based think tank that produced the policy
paper that’s the basis of Universal Credit. The prob-
lem was not one of design, he says, but that the
new system wasn’t supposed to have less money to
disburse. “Exactly the opposite happened of what
the report recommended, and it’s unsurprising
that what’s resulted is unfairness and chaos,” says
Singh, who for a spell in 2008 was a special adviser
to Boris Johnson, Britain’s current prime minister.
“While it might have been a good idea, the imple-
mentation of it was absolutely horrific.”
The bungled rollout provided rich fodder for
critics as British media carried stories about ris-
ing homelessness, lines at food banks, and a spike
in business for payday lenders. These cast a glar-
ing light on what Johnson’s predecessor, Theresa
May, once referred to as the “burning injustices”
that ultimately fueled the Brexit vote. One big cul-
prit: the effort to chop away at government defi-
cits swollen by financial-crisis-era bank bailouts.
Spending cuts enacted since 2010 add up to £70 bil-
lion ($87.6 billion).
Universal Credit’s failings found vivid expression
in I, Daniel Blake, a 2016 film by British director
Ken Loach that documented one man’s struggle to
get his welfare payments after being declared unfit
for work. It won the top prize at the Cannes Film
Festival just weeks before the EU referendum.
David McCarthy found himself in a similar
position. The 55-year-old from Chippenham in
the west of England suffered two ministrokes last
November that left him unable to walk. He lost his
license, which meant he could no longer support
himself as a truck driver. He struggled to sign up
for Universal Credit and needed help from a char-
ity to submit his claim.
It took 15 weeks for him to get any money, he
says. Payments were approved in January, but
because he got backdated holiday pay from his
previous job that month, they were immediately
stopped. McCarthy now receives a little over £600
a month, equal to about a third of his previous
income. He’s still repaying a £310 advance from
the welfare office that helped tide him over. “It’s
no wonder people go to food banks—they can’t get
enough money from Universal Credit to bloody
eat,” he says. “To the government you’re just a
statistic. The only thing they are doing now is
just buggering things up for everyone and spend-
ing too much money on Brexit. Why didn’t they
bloody leave it?”
There’s no prospect of a quick fix. The U.K.
has had seven cabinet ministers in charge of thewelfare system since the start of 2016, the year of
the Brexit referendum. (The most recent, Amber
Rudd, quit on Sept. 7.) Johnson, who’s been con-
sumed with Brexit since taking power in July,
hasn’t directly addressed the shortcomings of the
reform, though he’s promised to tackle Britain’s
social problems.
“We want a simpler system, we want a system
where people know what they are entitled to, and
to improve such things as takeup of benefits,” says
Kayley Hignell, head of policy for families, welfare,
and work at Citizens Advice, the charity that helped
McCarthy enroll in Universal Credit. “It doesn’t
reflect the variety and complexity of life.”
Life has the potential to become much more
complex for the U.K.’s almost 70 million people,
depending on the terms under which the country
exits the EU. An economic slump—even a short
one—is a real possibility, which could swell the
ranks of people needing to tap welfare benefits.
According to another member of the more than
15-strong group that originally worked on the wel-
fare reform concept, the problems that have plagued
Universal Credit are what can be expected when you
approach social security as if it’s a business. “My
concern about the process was that you had these
management consultants coming who thought that
you could approach the benefit system the way you
approached a failing company,” says Nick Hillman,
a former adviser to a Conservative minister and now
director of a think tank looking at higher education.
“You’re talking about real human lives. This week,
have they got enough money to feed their children
and pay their rent?” �David Goodman▲ McCarthy“It’s no wonder
people go to
food banks—
they can’t get
enough money
from Universal
Credit to
bloody eat”