The Universal Credit: Not a Universal Solution

By Helly Lee

This year marks the 50th anniversary of the War on Poverty, a campaign that put in place the essential social safety net that helped keep millions of Americans out of poverty. Policymakers have used this occasion to highlight their ideas for an economic agenda. One of the most prominent voices has been that of House Budget Committee Chairman Paul Ryan (R-WI), who recently cited the United Kingdom’s Universal Credit as a model to consider here in the United States.

The Universal Credit is a major safety net overhaul implemented in the United Kingdom that merges a half dozen income assistance programs — including cash benefits, tax credits, and housing subsidies — into a single credit for low-income individuals and families. While the concept of simplifying multiple programs may seem appealing in theory, policymakers should take note of cautionary lessons from the United Kingdom’s experience. CLASP has collaborated with the Center for American Progress (CAP) and the Center for the Study of Social Policy (CSSP) on Universal Credit: A Primer, a brief that provides an explanation of the Universal Credit for U.S. audiences. The timely release of this brief aims to equip policymakers and advocates with a deeper knowledge of the Universal Credit and the reasons why such a model could be harmful for the U.S. safety net in serving its poor.  In particular, the brief highlights the fact that the Universal Credit is being implemented in the context of austerity-driven cuts to the social safety net that make benefits less responsive to changing economic conditions.  Moreover, low-income individuals and families need multiple ways to apply for benefits, not just online portals as provided in the U.K. program.

Policies aimed at improving the safety net can only work if they are backed up by the investments needed to insure that low-income workers can meet their families’ basic needs and succeed in the workplace.  For a number of years, the U.K.’s commitment to reducing poverty was backed up by such investments and was making a demonstrable difference. Deep cuts to safety net programs in the U.K. are threatening to undo years of progress in reducing child poverty. The U.S. should certainly not emulate that part of the U.K. changes.

The brief notes that since the U.K. safety net structure is significantly different from the U.S. federal-state partnership, the concept cannot simply be transposed into our system. The Universal Credit also starts with programs that provide more basic assistance than what is available in the U.S. and sits on top of a universal health care system. These key differences are important for policymakers to understand and consider when thinking about reform here.

In the U.S., other efforts have been underway to improve access to benefits, such as the Work Support Strategies (WSS) Initiative which supports multistate demonstration projects to test and implement more effective, streamlined and integrated approaches to delivering key services. Strategies like WSS recognize the important role that states play in providing services and delivering critical programs. 

CLASP believes low-income families should have access to the range of income- and work-support programs needed to get back on their feet during times of difficulty, and to thrive at all times. The success of our system should not be measured by the number of programs, but by whether needy individuals have access to benefits that meet basic needs, respond to economic conditions, and support workers and families.