Labour’s benefit overhaul ‘would hit pay to poorest’
JOHN McDonnell’s far-Left plans for a new benefits system would hurt the poor and slash the payments they receive, an influential thinktank has warned.
The Centre for Social Justice, founded by Iain Duncan Smith, has warned that Mr McDonnell’s plan to introduce a universal basic income (UBI) for everybody will divert cash away from those who need it most.
The Centre’s head of policy Edward Davies said the most disadvantaged households would get less than half the sum from under universal credit and could prove a massive disincentive for people to find work.
“The idea of universal basic income is absurd,” he said. “Welfare is to provide a safety net for the most vulnerable, while at the same time, empowering them climb back out of poverty.” Mr Davies said universal plan supporters fail to understand the nature of poverty, which he said was not caused simply by lack of money but family breakdown, educational failure, debt, addiction and long-term worklessness.
The report said universal income payouts could be no higher than £6,200 a year per adult without “bankrupting the exchequer”.
The plan to introduce a universal income was Labour’s response to the welfare reforms brought in by Mr Duncan Smith to help make work pay and break the poverty trap for those stuck on benefits.
Mr Duncan Smith’s universal credit programme, has simplified the complicated benefits system and is being rolled out across the country. But teething problems have led to demands from Labour campaigners for it to be dropped.
Mr Duncan Smith feared a universal basic income would be disastrous, requiring “a giant tax hike for all, hurting those on the lowest incomes the most,” he said.
“It would send businesses fleeing the country in droves and would bankrupt the exchequer. To succeed, we need to be able to adapt to change. Basic income is a direct disincentive to retrain, upskill and seize new opportunities.”
Labour disputes the thinktank report. A party spokesman said: “In areas which have had universal credit fully rolled out for a year or more, there was an average increase of 52 per cent in food bank use in the 12 months after the rollout compared with the year before.”