John Major is right, universal credit is a disaster for the Tories – but it will have less effect than the poll tax
The poll tax had its maximum disruptive impact in marginal constituencies, whereas universal credit will mainly affect the vulnerable in safe Labour seats, who would be inclined to vote Labour or SNP – if at all
According to the former prime minister, Sir John Major, universal credit has the capacity to inflict the same damage on the Conservative Party as the poll tax did three decades ago.
He knows of what he speaks. As social security minister and then chancellor of the exchequer in the final years of Margaret Thatcher’s administration, he watched as the community charge, as it was formally named, wrecked the government’s popularity.
The move from the ancient system or property “rates” resulted in bizarre anomalies whereby residents in some local authorities had bills of nil while others faced huge increases. It wrecked local government finances, and the efforts to repair the worst of the damage also pushed the national debt higher.
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First launched as an experiment or pilot scheme on Scotland in 1988, it led to a lasting resentment towards Westminster and the Conservatives there. Designed to be fair – on the grounds that everyone would pay the same flat rate in any given area – it was resented for being anything but, entirely unrelated to income or wealth.
There were riots in central London, and protests in genteel Windsor and Maidenhead. There was a mass campaign to delay payments to local councils, who had to issue thousands of county court judgments to refuseniks. It was a disaster, and its only useful legacy was to serve as a case study for students of politics in how not to make policy. When Sir John became prime minister, he swiftly abolished the poll tax.
Is universal credit destined for the same fate? There is much that is wrong with it, and it would be better if it could be paused. In its most recent report the National Audit Office (NAO), however, suggested that it was now too late to do so. Yet if the alternative is to implement it but then repent and reform it later at vast cost, then surely the case for a review and a more cautious rollout is obvious.
The political effects, though, may not be as severe as those of the poll tax. For the latter was sometimes said to have been designed like an Exocet missile aimed at the Tory vote in key Conservative-Labour battlegrounds. It did damage the Tories, almost irreparably, but it was of course not something ministers wished for: it was a product of particular circumstances, and emerged by happenchance and incompetence.
The poll tax had its maximum disruptive impact in marginal constituencies such as Southampton and Lancashire, where the pattern of property ownership – often large numbers of terraced homes – tended to bring the greatest changes. It was also something that affected virtually every adult. Conservative backbenchers representing those seats started to panic, and even Ms Thatcher could not resist their personal fears of imminent unemployment. So she was deposed.
By contrast, universal credit will mainly affect the vulnerable, primarily in safe Labour seats, who would be inclined to vote Labour or SNP, if at all. Looked at from a purely cynical, party political, Conservative point of view, the actual direct electoral damage that will be done could be much less than the old community charge, which amounted to a universal poll tax on every adult.
So Sir John’s warnings may not be so well-heeded by today’s Conservative Party as decent figures such as its former leader might wish. The looming and spectacular failure of universal credit will, however, damage the government’s already shaky reputation for competence. The universal credit system is already, ironically, overly complicated to administer and run the software for, and has produced all manner of anomalies and cruelties. If it is designed to save money, then it will be done in the clumsiest manner. Even the most flinty-hearted would feel that welfare reform should have been executed in a more humane, sensible, efficient fashion.
Second, and as with that poll tax experiment so long ago, fixing universal credit will cost the exchequer more. As the NAO indicated, there may well turn out to be no net saving in the end, either from administration or from lower overall payments. Getting people back to work is laudable notion; but there has to be work for them to go to. In post-Brexit Britain there will inevitably be economic dislocation – some of it serious – and redundancies.
Some communities that lose their car factories, say, or other industries and trade will be hit especially hard. That will add intense pressure to the UK’s weak public finances – something the International Monetary Fund has recently highlighted.
Taxes may need to rise. So universal credit does have the potential to wreak political damage, but indirectly, and as part and parcel of a government too busy with Brexit to deal with the other complex challenges it faces. In truth, too, there has been too little intellectual firepower and consistency at the Department for Work and Pensions to inspire much confidence. The DWP, after all, has seen five secretaries of state in three years (Esther McVey, David Gauke, Damian Green, Stephen Crabb and Iain Duncan Smith). It may well take a few more to sort out the mess.
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