There is a commonly stated view that Northern Ireland will be “hardest hit” by Welfare Reform. In fact, Northern Ireland may stand to gain most by revisions to the system designed to make work pay and thus help people out of poverty, and in particular from Universal Credit.
This week saw the beginning of the implementation of Universal Credit – which essentially merges six benefits (those associated with income support, tax credits and housing benefit) into a single payment. This is being done partly to simplify the system (no bad thing in itself), but mainly to enable the system to allow people entering work not automatically to lose all their benefit entitlements. So, for example, the construction worker who has fallen on hard times since the boom will no longer have to reject temporary work for fear of losing his housing benefit – the system will take his new wage and existing benefits collectively and ensure that he his financially better off in work than out of work. The same will apply to parents struggling to balance part-time work with childcare, temporary workers reliant on income-based jobseekers’ allowance, and so on – from now on, all will be significantly better off financially by working (even temporary or part-time).
The argument that there “is no work” is no more applicable to Northern Ireland than it is to most other UK regions as unemployment rates are similar everywhere outside the South of England. In any case, ensuring that people who want to work can do so without financial penalty will make more people economically productive and has the potential, in itself, to create jobs. Northern Ireland does have the highest economic inactivity levels in the UK (although interestingly the gap has closed during the recent recession), and the whole objective of Universal Credit is to make it easier to reduce that level.
Of course, welfare reform will not magically change our economic fortunes nor tackle poverty on its own. The point is that it will enable us to do so better than the current system, which forces willing workers out of the workplace and traps entire families and even entire communities into an endless cycle of poverty and exclusion (by essentially forcing them to live on State handouts whether they want to or not). Work is an essential component in the fight against poverty because it not only provides financial resources, but also self-esteem and social network which can be invaluable. It is oft quoted that half of people in poverty are in work; but there is a rather more inconvenient truth that everyone in a non-working household is in poverty. Therefore tackling worklessness, as well as educational underachievement, indebtedness and addiction, is an essential part of building a fairer, more prosperous society. Anything which is a step in this direction should be welcomed.
Change is difficult and, as ever, the devil is in the detail. However, the principles behind Universal Credit are sound – and in fact, given its rates of economic inactivity, Northern Ireland stands to gain most from it.