Amber Rudd has done the right thing by not extending the two child benefit cap, but universal credit has failed

Like the poll tax before it, or the NHS IT debacle that cost taxpayers £12bn, the reform of the welfare system has turned into a case study of how not to conduct public policy

The system is now so badly structured that fixing it will cost the exchequer many more billions that it might ever conceivably save (AFP/Getty)

When it was launched by Iain Duncan Smith in 2010, a seeming political lifetime ago, universal credit had three main, interconnected, aims, all perfectly laudable. First it was supposed to simplify the complicated and overlapping webs of benefits regimes that had grown up under the welfare state. Second, it was supposed to save the state money in the process – fair to taxpayers and to benefits claimants. Third, the economy as a whole was designed to benefit from the guiding principle that no one should be better off on social security than in work. With tax credits, New Labour and Gordon Brown had implemented some reforms that moved policy in that direction. This was to be a much more ambitious exercise.

It has failed, on all three counts. That much has been known and, from time to time, even acknowledged by ministers for years. Amber Rudd’s radical further reforms to the system represent a more candid and fundamental admission of crisis. She is, she says, seeking to bring a more “compassionate” approach. The arbitrary rules about the child element of benefit after the second child are being abolished; payments will be made to the principal carer, usually the woman, so reducing the abuse of the system by bullying or irresponsible male partners; and she has massively slowed the transfer of claimants into the scheme – a few thousands rather than the 3 million originally scheduled.

She has moved quickly since her arrival in the department to save the government from a further embarrassing debacle, to join Brexit, the railways, the NHS and much else. Fortunately for her, and much more so for the most vulnerable in society, the very weakness of the May administration has strengthened her hand. We may, then, be witnessing the slow demise of universal credit, a system that grew so flawed as to be unworkable, and expensively so. Like the poll tax before it, or the NHS IT debacle that cost taxpayers £12bn, universal credit has turned into a case study of how not to conduct public policy.

The system is now so badly structured that fixing it will cost the exchequer many more billions that it might ever conceivably save – and chancellor Philip Hammond has already had to devote scarce funds in emergency treatment for universal credit’s problems. More may have to follow.

So, far from helping the poor into work, universal credit has merely served to push them into the foodbanks. Making it less generous perversely added to the disincentives to work. A successful High Court case, coincidentally coming alongside Ms Rudd’s reforms, which was brought by four single mothers highlighted how erratic monthly payments can wreck the finances of households living on the very edge of viability. That too will, presumably, now be fixed.

Delays to payments, more generally, became far too common for people with no financial reserves to fall back on. Even when payments arrived on time, the monthly intervals could be unmanageably long for people with “chaotic” lifestyles, or who just happened to find it very difficult to manage. There was no distinction between, say, payments to help with rent and other benefits, with the inevitable result that arrears went up and landlords grew reluctant to let to UC tenants. Now Ms Rudd will ensure that payments can go direct to landlords. The housing market, already a hostile environment for the poor, will become a little easier as a result.

It is just as well that someone armed with some brains and emotional intelligence should have happened to find themselves in the Department for Work and Pensions at a critical juncture. The DWP has had a high turnover of minsters, to say the least. Ms Rudd is the sixth secretary of state in three years – one reason why no one has taken a grip of universal credit.

The last one to have made any mark on the department was Mr Duncan Smith, whose idea universal credit was in the first place, developed in his time in opposition, when he became an unlikely evangelist for the poor. Any merits it might have had were sabotaged by the Treasury and George Osborne’s interference in the reforms, which were mostly conducted with a view to extending the austerity regime to the very poorest echelons of society. It was why Mr Duncan Smith finally resigned in disgust in 2016 – blaming “the government’s austerity programme for balancing the books on the backs of the poor and vulnerable”.

The last incumbent at the DWP, Esther McVey, showed a near remarkable lack of sympathy for the people who relied on her department for help, cheerfully, if unwisely, admitting that there would be losers under her version of universal credit. The message ran entirely contrary to the “One Nation” approach Ms May dedicated herself to when she came to power in 2016, but it was an accurate representation of the McVey way. Ms McVey quit, after 10 months, over Europe. She has not been missed.

The DWP is not usually regarded as a springboard to Number 10, but Ms Rudd’s first major initiative shows her to be someone with the sort of clarity of thought and purpose that is rare in this flailing government. Her shortcomings at the Home Office were mostly the result of Ms May’s regime, and have increasingly been framed in that context. Were her seat in Hastings less marginal, she might be an obvious choice to succeed Ms May, appealing to the pragmatic, sensible centre of her party. If only there was such a thing.