Unpicking the Universal Credit crisis and Brexit wars, continued
Is the government's welfare programme about to come off the rails, or can tweaks be made to ensure the poorest in society receive the support they need? Plus, will parliament have a chance to vote on the final Brexit deal and why did a Conservative whip pen a letter to universities this week? With Henry Mance and Miranda Green of the Financial Times, plus Henry Newman from the Open Europe think tank.
Presented by Sebastian Payne. Produced by Madison Darbyshire and Anna Dedhar. Edited by Trixia Abao.
Welcome to FT Politics, the Financial Times' podcast on all things British politics. I'm Sebastian Payne and in this week's episode, we'll be discussing the growing debacle of a Universal Credit welfare reforms and the latest in the Brexit culture and Parliamentary wars.
I'm delighted to be joined by Henry Mance, the FT's political correspondent, political commentator Miranda Green, and Henry Newman from the Open Europe think tank. Thank you all for joining.
Let's kick off with Universal Credit, which has been increasingly popping up in the headlines in recent weeks. It's the government's major welfare reform programme that is beginning a nationwide rollout. It's been in gestation since 2010 and has suffered numerous delays, technical setbacks, false starts, and cut back. Now that 6 working age benefits are being rolled into one single payment, is it ready to serve millions of Britons or will it be another [INAUDIBLE] administrative calamity?
Miranda Green, can you just begin by explaining what Universal Credit is? Essentially, it's a way of simplifying the benefits system and making sure it's always better off to be in work than collecting benefits.
Yes, that's right, Seb. So it was supposed to be a rationalisation of the very complicated series of benefits that are available to people of working age. And it was invented in the coalition years. It was supposed to be actually more generous than the previous collection of benefits, as a way to actually encourage people off welfare and into work.
The huge problems that Mrs. May is now facing with rebellion even on her own backbenches over this flagship reform, are due to a bunch of factors, several of which actually had to do the design. But principally this idea that people have to wait 6 weeks to actually get any of the benefit, which of course is longer than you would have to wait for your paycheck and puts people into severe difficulties. Homelessness charities are warning it will put people on the streets, et cetera, The food banks are warning that people are completely broke while they're waiting for it.
But there's also a problem with how it's being implemented, not least because actually it comes against a background of constant attempts by the Treasury to bear down on the welfare bill. So actually, it's ended up as not being more generous and an encouragement into work, but has ended up quite punitive.
Now the huge problem with that is that poor Mrs. May is then forced, as she was at PMQs this week, to bang on endlessly about some of the welfare mistakes that Gordon Brown made in the Labour government, which a lot of people can't now remember, because she can't actually blame the real culprit for some of these messes, who is George Osborne, who constantly was bearing down on the welfare bill, had this terrible line about strivers and shirkers which alienated so many people. And he's actually left her with serious problems with an unfunded policy. There are still people who think this is a good reform, but it's got to be done properly and carefully or it will cause serious hardship over the Christmas period, which could be almost as bad on domestic policy as Brexit is for her in terms of our relations with the outside world.
Henry Mance, the argument of this essentially goes between Iain Duncan Smith, who thought of this idea after he left being leader of the Conservative Party before he came back into government, and he did his broken, break down Britain paper where he looked into all the principles of this and created the idea of Universal Credit. That hit up against the reality of austerity, where George Osborne was trying to, as Miranda said, bear down on the welfare bill and bring that overall spending limit down. That's that made the so-called "taper rate", which is the level at which you get benefits and then start getting less and less as you earn more, has been much steeper than it could have been. And this has caused a lot of concern among some of the conservative backbench, that it's going to actually be an unfair policy that's going to be worse off than the current system.
Yeah, I think this has some of the hallmarks of the type of policy over which backbenchers would quite happily rebel. So if you think it's quite difficult for conservatives really to rebel over Brexit, because that's going against the will of a huge referendum on this issue, what they're going about and what they're looking at is the design and implementation of a policy whose aims they are accepting. So it's a much more discreet type of rebellion. The Work and Pensions Committee which has 11 members, five of them conservative, recommended and urged the government to reduce the delay in initial payouts from 6 weeks to 4 weeks. And that's the kind of thing that a backbench can go ahead and do while calling themselves a member of the Conservative Party and sort of proudly supporting Theresa May.
So this thing about the 4 to 6 weeks man, you know, I spoke to a former civil servant in the treasury who said each week you reduce costs about GB 200 million, and in fact, the closer you get, it gets progressively more and more expensive. But this looks as if Theresa May is probably going to have to cave in on this, because Heidi Allen, who's a very outspoken conservative MP, has said this has to be reduced. And the crunch time is going to be around the budget.
Do you think that there will be some kind of change to the payment period in Universal Credit, which really does seem to be the key contention point?
Well, it's certainly one of them. And when you talk to some of the Tory rebel backbenchers, I was talking to one last week, they say that in their private meetings with Mrs. May, she in inverted commas, "gets it". So they seem very optimistic, that as Henry's quite rightly said, their contained rebellion will actually bring them some results.
There's a bigger problem for May though, which is that she's actually being forced to cave in on several things at the same time. This week brought another u-turn over another benefits issue, a housing benefit cap, which will also again be expensive to change the plans. And overall, what you see is tiny little reversals all the time that undermine the government drives to keep some sort of austerity message going. All of this muddies the water massively for the idea of what the conservative government is actually for.
But there are huge political risks here, Henry, as Miranda is saying, we're entering the winter period and the last thing the government needs is a disastrous rollout with lots of stories of families who can't claim their benefits, have found the rollout isn't working. And this whole idea about Universal Credit has been that it will be a gentle slow rollout, but all the trials across the country have had some very mixed results there with some administrative calamities in some places. On a nationwide scale, that could be catastrophic for Mrs. May's government.
I think that's right and I think there are harder cases there towards the end of the rollout of Universal Credit. So the idea is you start with people whose benefits are easier to administer. I mean, George Osborne's bet, I suppose around welfare, was that the key swing voters did not care very much about people on welfare or people who certainly were most dependent. And to some extent, I mean, they won a majority in 2015, he's right. But I think at a time when the government's about to embark upon very, very difficult administrative tasks, to customs, agriculture, etc. To have this and to have it go wrong would be rather disastrous.
I think that's a really key point actually, Henry. Because if you go back to that 2015 election, of course they didn't expect to win it, and this new book that's out from Oliver Letwin actually confirms they haven't even thought what they were going to put in the Queen's speech because they thought it would be another coalition. So actually, they didn't think they were going to have to make a lot of these welfare cuts, which really are hurting.
I mean, I was speaking to somebody from the Child Poverty Action group. They supported Universal Credit when it was designed, right, when it was supposed to actually ease people into work. Now in its current form, because of the squeeze, they're very worried. They say it's not rolling out a welfare reform. It's rolling out child poverty.
On the other side of the Commons, Henry, the Labour Party still broadly supports Universal Credit. Their policy is to say that it needs a pause and a think about how it's rolled out. And I think certainly they would probably support this reduction from the 6 weeks to the 4 weeks payment period.
But you could see a situation where they actually roll against Universal Credit entirely unless there's a lot more money. Because when Iain Duncan Smith designed it, it was essentially putting a huge amount more into welfare spending to have a very generous taper rate for benefit payments. But the labour party has not quite decided what its position is on welfare. And you can imagine if this rollout does become a disaster, they will then roll up their hands and actually, we need to scrap the whole thing and think again.
Yeah, the labour manifesto was, I think I'm right in saying, less generous in terms of reversing benefits cuts than lib dem manifesto was. I mean, what you do in opposition is slightly different to what you do in government. You can oppose stuff in opposition, but also you can gently oppose stuff, and say, oh, we agree with the principle, but we have one or two tweaks, which actually means, if we were in government we wouldn't bother doing this, because we've got 7 other priorities, including nationalising every rail franchise and getting our fingers on the utilities, et cetera, et cetera.
I've just been very cold-headed politically about this, as Henry was saying that George Osborne's calculation was essentially that you could be tougher on people claiming benefits because they're less likely to vote conservative anyway. But the political dynamics have changed so much since that period and this focus on inequality in society that a lot of conservatives are now really genuinely worried they are now being seen as the nasty party again. And that's why I think Universal Credit is so key to the party. Because if it gets this wrong, it will reinforce that message that the conservatives are only interested in kicking the poorest in society, whereas Labour is always on the side of those people and the people who just want to get a job and move out of benefits and into work.
Well that's right, Seb, you're right. And also that's why the 6 to 4 week thing plays so bad for ministers because it looks as if they genuinely don't understand that people don't have a nest egg to fall back on if the check's not coming every 4 weeks. So they have to do something about that I think because of the whole kind of brand issue with the Conservative Party not understanding how most people live from paycheck to paycheck.
And I think also, Henry is absolutely right to point out that the Labour Party can make political hay from this even if their own position on welfare is really quite unclear. And it wasn't something they chose to focus on in the 2017 manifesto at all, but it totally works for them. And I think they'll continue to push on it. And of course those Tory backbenches, as you quite rightly say, will probably have enough wins to then row in behind the policy. But there are other welfare cuts that are also happening, that background of the GB 15 billion cuts in that 2015 Tory manifesto. And those are not quite so easily solved. Because as you say, Seb, every time you reverse one of these decisions you're adding to the burden on the Treasury and they're not happy about that.
So ultimately, Henry, Universal Credit is probably still going to happen. You know, we're 7 years into this scheme now. For it to be halted entirely would be quite ludicrous and, you know, Labour might rally against it for political reasons. But you would imagine with some tinkering it will eventually get there and the kinks will be ironed out. Do you think the Conservatives will ever get any credit for doing that from the public, the kind of [INAUDIBLE] we've made the benefits system fairer, easier, and maybe cheaper as well?
Also, I think this idea of sort of just ironing out the wrinkles, I think you should be really sceptical when people in government use that phrase. You know, because what it means is they've got some serious problems with it. And this figure that's coming out where only 20% of people in the rollouts are unhappy. Well of course, because the other people are the easy cases. If you've got 20% of hard cases, where the benefit is not serving them well and it's too difficult to administer and they're experiencing serious problems with budgeting for their families, that's a lot of people to risk forcing below the poverty line or out onto the street. It's a potentially disastrous set of headlines for Mrs. May over the Christmas period if they can't get this right.
And there just seems this general lack of compassion behind the circumstances of those people, which was encapsulated by the helpline, which is if you've got a problem with Universal Credit, you ring them and it cost 55 [INAUDIBLE]. And if you're really on the breadline, that's quite a lot of money. And the fact was you're having these huge waiting periods, to then be told they would call you back. And this was highlighted in PMQs by Labour MP and the government has then abolished that. And it's all those little things across the system that's going to apply to I think sort of 6 million people by the time of the rollout, that could easily just unravel and then create a political storm.
I think we're talking about hundreds of millions of pounds, rather than the billions that would completely wreck the government finances. If you go to the lifting of the housing benefit cap, I think that was estimated to save the government or would have saved the government GB 500 million over 3 years. I mean, these are not budget-ruining amounts of money. But if you're Philip Hammond and you've got a budget coming up in November, you might think gradually little by little, my sort of freedom to be bold, to be radical, to save my job, is being eeked away.
On this broader political point that you make, Seb, I think the key thing is to realise that it's not so easy now to divide and rule. You know, when Osborne had this slogan "strivers and shirkers,"
Which Iain Duncan Smith hated at that point.
It was absolutely appalling. But the problem with that is if you've got millions of people on in-work benefits, then you can't get people to see them as somebody else who's suffering, because this is a lot of working families and this is a kind of structural problem with the UK economy now. That you've got a lot of people in work and in poverty. So you can't just have a blanket label for people on welfare. As for the others, it doesn't work anymore.
And the Brexit wars have rolled on this week. First we've had the Parliamentary battles about whether there will be a vote on the final deal between the UK and the EU. Brexit Secretary David Davis seemed a bit unsure about whether there would be.
Then we had the bizarre sight of Chris Heaton-Harris, who's a conservative whip, who wrote to universities requesting the details of academic cheating, topics about Europe, and their syllabuses. And on both fronts, the debate is coming a bit touchy as the negotiations overall remain in stalemate.
So Henry Mance, let's begin with the Parliamentary side of things. It was a rather confusing picture that David Davis left after his select committee appearance, where he said the deal wouldn't be struck until the 11th hour of the 11th day of well, not the 11th month. And that was leaving no time for a vote in Parliament. But then there was a bit of a backtracking on that. So where are we? Will there be a Parliamentary vote after all this when there is hopefully a deal between the UK and the EU?
For months the government's been saying there will be a vote. And that has actually gone into the headlines quite a sort of hole. And when you break that down, you've start to realise why it may actually not be very important as a vote and it matters what kind of vote there is.
So it matters firstly when the vote is. Has Briton already left? Is there time to go back to the negotiating table? And it also matters what the status of any vote is in terms of if you already know what happens. Does Briton leave the EU on WTO terms? Is there some kind of mechanism forcing the government back to the negotiating table, et cetera. So the headline commitment, which has been given for months, isn't quite good enough for a lot of MPs and this is something that enough conservatives are probably willing to rebel over to defeat the government on the Repeal Bill if it came down to it.
So Henry Newman, there is this basic question that, obviously MPs votes to trigger Article 50 begin the process of leaving the EU. And the assumption is if there is no more vote then we will leave automatically on the 30th of March, 2019 unless something changes. But in all likelihood, if there wasn't a vote on the deal, which would be just a huge thing, wouldn't it be judicially challenged somehow?
I think even if there is a vote and even if that vote is lost, the UK will still leave at the end of the Article 50 process.
The train is in motion.
So unless both sides potentially agreed to withdraw the Article 50 process and that would require probably unanimity on the EU side as well, we're going to leave at the end of Article 50. The question though is what sort of vote will be given to Parliament exactly as Henry Mance was saying. And the government's already made certain commitments. They've already said that they will protect, in law, the status of EU nationals currently in the UK. So they're talking about legislation which affects withdrawal, but they're not saying that there's going to be a bill on the withdrawal agreement.
Then we had some more confusion yesterday with a minister from the Department of Exiting the European Union, saying that the transition agreement would have legal footing. And then the department slightly trying to backtrack from this. But the reality seems to me that there would have to be legal clarity around any sort of transition deal otherwise, what would business or government or anybody else understand the landscape to be?
And this comes back to what Henry Mance was just saying about what that vote would be. So let's say, about this time next year, the transition deal is clear and the outlines of a future trade relationship have also been put out there. So that would be the vote that goes before both the Commons and the Lords have. If MPs voted that down, the government would probably say in quite stark terms, OK, if you vote this down, you're opting for a no deal Brexit, which would obviously be something very different.
But then someone might put an amendment or something like that to send the government back to the negotiating table. Is there any way you could see that happening?
I think it would be very difficult for the government to go back to the negotiating table at the last hour. And yes, I think that is very problematic. And I think there are obviously many MPs with legitimate concerns about the way that the government is proceeding and legitimate desire to scrutinise the government. And indeed the government has said that they need to make changes to the way that they've done the withdrawal of the Repeal Bill so far, particularly around these so-called "Henry VIII Powers".
But I think there is also a clear attempt by many, not all of those critics, to frustrate the process of Brexit. And they're quite clear that that is really their ultimate goal. And therefore the government is quite right in some level to be suspicious about that.
Yes, I think there is some risk of underestimating how flexible the EU is willing to be. I mean, Donald Tusk has said that if Britain wanted to stay indefinitely in the EU, it could do so. And I think if Parliament were to put in a clause saying, look, we're going to put in-- we want the government to request or to try to negotiate an extension to Article 50 in order to hammer out these terms, that I think would have some force.
Serious Parliamentary vote, and you're maybe talking about a statute in Dominic Grieve's pro-EU conservative amendment to the Repeal Bill. If it were a statute, and the government knew it had to get over that hurdle, I think it would shape its attitude towards negotiations. I mean, remember that not only did the majority of MPs vote remain, but a majority of conservative MPs voted to remain. So you don't really have a caucus in there who are going to support a no deal sentiment or a very radical break with the EU.
But perhaps, I think there are certainly many conservative MPs who felt quite passionate to remain at the time of the referendum, I'm not sure that actually the Conservative Party is really that divided now. I think the group of sort of hard core remain MPs is relatively small. And even, we have Nicky Morgan speak in Open Europe event earlier in the week, and she was clearly quite reconciled to a result that she didn't initially want. But I think talking about the practicalities of getting that and legitimate scrutiny of the process, which I don't think anybody would have a problem with. I don't think the Conservative Party is actually particularly divided on this.
And Henry Mance, we've also got the fact that the European Parliament is going to have to vote on this deal as well. So if they're going to vote on this in the British Parliament, well now, the House of Commons, I sort of tend to agree with Henry Newman, that it probably would get through unless there was something particularly egregious in that deal. Because it will be whipped with an inch of their lives really to say if you vote against this, you'll bring down the government, which would be very possible.
But the House of Lords is much trickier. There certainly isn't a Brexit majority there. And you can't really see what kind of deal peers would go for. Because as many peers and very influential peers, like Labour's Lord Adonis, Baroness Wheatcroft, and the conservatives who want to stop Brexit entirely.
Yeah, I think one, is you start to see differences being drawn up in outcomes. I was speaking to one senior Labour MP this week. And he said, look, there's no backing in either house of parliament for no deal if it's a no deal scenario that the UK has brought about. Very different if there were a punishment deal imposed by Macron and Merkel, which was offensive as it were to British--
So do we have shade of no deal now? The Philip Hammond sort of bad tempered no deal, or--
Right. Yes, exactly. So I think we risk getting things in two sort of stark terms. But what's amazing to me is that the debate hasn't moved on I mean, really we should have been in the next stage of the Repeal Bill by now. That's being kicked over to next month. And if there is a statement, this week really just took the government back into an issue that it was trying to get out of. And it just seem to me that there is a realisation around the Commons that time is running out. We're talking about a year to agree the basis of a trade deal and the exit agreement and the transition deal.
And in particular, the point of this withdrawal bill is to create legal certainty. And that's why I think many people are so disappointed that Labour has voted against this at second reading. The first Parliamentary stage, they chose to oppose the bill, I think on reasonably spurious terms, when they themselves had proposed a very similar bill in their manifesto. Now Keir Starmer has come up with new red line tests and so on, but I think a lot of this really looks more like opposition politics than actually serious scrutiny.
Let's say if the withdrawal bill though, Henry Mance, is quite concerning, because this was all about providing legal certainty here. And there's been sort of hundreds of amendments proposed and obviously it's a huge piece of legislation to copy and paste all those EU laws into British laws in a very short space of time. So the question is if the government has to get that through because that would be a chaotic Brexit if there was not legal certainty from day one.
Yes, and it certainly will get it through. More than 400 amendments, the ones that matter are the ones that are put down by pro-EU conservative MPs led by Dominic Grieve, who's a former attorney general so has gone into the detail. And they will receive the backing of Labour, but there are 10 or so Labour MPs who back Brexit, so you need about 20 conservative rebels to make those amendments stand up or you need the government to give in.
Which I think is quite tough, Henry Newman, if I think about the makeup of the Conservative Party, I can think of sort of 6 to 8 people who would back the Grieve amendment without many qualms, but beyond that it starts to get difficult.
And indeed a fair number of Labour MPs who might go against the Labour government. We've seen one of the Grieve amendments is around continuing to have the or having to incorporate the European Charter of Fundamental Right, the new part of the European human rights landscape into domestic law. And that would of course be quite difficult for many conservatives who are already committed to human rights legal reform, but it enjoys the support of Labour MPs. But it's unclear how many Labour rebels you'd have around an amendment like that.
So Henry Mance, let's just look at the other Brexit development this week. This quite bizarre letter of Chris Heaton-Harris, who is a conservative MP in the government who wrote this letter seemingly off his own back to universities requesting the details of academics, and all their teachings on European matters. And this doesn't seem to be a government endorsed activity. And some have suggested it was for writing a book about Brexit or something. But it's created this atmosphere of some kind of witch hunt going on. Is that fair do you think?
Firstly, I mean, it was very funny. And in the midst of all this very serious legal argument, the fact that someone should write to all the universities asking for details of all of the people who teach EU subjects, which would involve everyone in the legal department, bunch of [INAUDIBLE], that this is going to be part of some serious inquiry. I think it was comic. Academics interpreted-- well, some academics interpret it as sinister. And the government's way out of it was to say, well, look it was a personal letter and we think he's writing a book. So if he wasn't writing a book before, he probably is now on order of the government.
I think, look, the way it became worrying is the way it was picked up, particularly by Daily Mail, because there I think you do have the beginnings of a very violent cultural battle as it was ever judges but now the universities and the idea that anywhere which has a particular leaning is somehow illegitimate. I mean look, the media in this country, or the newspapers at least, are lean to the right. But that's the sort of feature of British politics and British landscape. I mean, those newspapers have many redeeming features.
Because, Henry Newman, the thing that sort of struck me about this that Brexit in some ways has moved on from this kind of straightforward debate about economics and about trade and about the UK'S future economic and gone into this culture wars kind of thing, where you're on one side or another. In some ways, I think Brexit has become the UK'S identity politics, in the way people now identify all their world view and political persuasions on remain or leave. And this sort of idea of having a witch hunt against one side to another. And there's people on the remain side as well who actively are looking to weed out leave supporters. And the whole thing about academia is that it is overwhelmingly more to the left, as Henry had said, where media was only to the right.
I mean, I think it's a left-right problem. It's uniquely-- I think, first of all, the letter was ill advised at best. And equally wasn't indicative of a broader government programme quite clearly, it was a personal initiative for whatever reason. I wouldn't defend the Daily Mail's attack on judges for a second, but I do think that on the universities, there is a broader concern that there's a particular framework for understanding Europe that is never critical in universities. But I don't think it's the government's responsibility to do something about that nor indeed an individual MP.
But I completely agree with you that there's a broader sort of [INAUDIBLE] [INAUDIBLE] that's going on. And one of the things I'm most worried about is essentially the sort of de-legitimization of debate over Europe, the regular people are sort of as if there's no legitimate argument on either side of leave or remain. The centre ground seems to have been completely lost. And whether that's around sort of university high tables or London dinner parties or anything else, I think that's very concerning.
And it's a wise thing, I think at universities as well about free speech that we've reported quite a lot about Henry, that this idea of forms for debates are sort of getting closed down. You have a narrower and narrower window of acceptable views. And of course Brexit, generally in metropolitan remains falls outside of that.
Actually, I think there was some quite heartening news on universities this week, which is that applications indeed from EU nationals have gone up for courses in the UK or the early application courses involved with in Cambridge have gone up 6%, 7%. So the idea that completely toxic to other EU countries and that our universities are going to shrivel has not quite come true, so I think that was worth noting as well.
And finally very briefly, Henry, just a quick overview of where we are at with Brexit. Obviously we had the summit, we didn't get the nod. But there have been trade preparations beginning there. What's going to happen next on Brexit or is it all at a bit of a standstill at the moment?
I think the summit was exactly what we expected. I think very few people thought we were suddenly going to get the nod through and that EU Brussels was going to enjoy the chance to say no to Mrs. May.
But I think she does need to move a little bit further on the money. She's already essentially committed in her Florence speech, but she probably needs to put some of this down on paper. And then I think she'll have a full moral high ground. Because really the reality is that Brussels, I think, is losing the argument that the UK hasn't made sufficient progress. It's looking more and more like a political judgement masquerading as a technical judgement . But if she puts some of that clarity down about what she is prepared to pay, on a contingent basis of course, to a trade deal I think she'd be able to really gain the moral high ground.
Well, I think that's an excellent position outlined in the FT's editorial column quite recently. And that's it for this week's episode of FT Politics. Thank you very much to Henry and Miranda for joining. We'll be back next week with another instalment. This week's episode of FT Politics was produced by [INAUDIBLE] and Madison Darvisher. Until then, thanks for listening.