One of the joys of Budget analysis is looking for the unexploded bombs, the measures that could – to use the traditional verb – unravel and cause the Chancellor future torment. I’m not claiming to have spotted a confirmed UXB here, but there are several signs in the Budget papers that suggest that the changes to Universal Credit will come in for a lot more scrutiny in the coming weeks.
The headline announcement on UC is a good one: Philip Hammond has decided to increase the amount of money UC claimants can earn before they start to lose benefits, known as the Work Allowance. This will cost the Treasury £1.7 billion a year by 2024.
Politically, this is sensible and positive. It suggests that ministers are, albeit rather late, accepting that the major cuts George Osborne made to the Work Allowance in 2015 were a bad idea. Those cuts were always impossible to reconcile with Tory rhetoric on “making work pay” – a party that claims to be on the side of the working poor should never have signed off on a policy that makes it harder for people to work their way out of poverty.
But a close read of the Office for Budget Responsibility’s report on the Budget raises several warning flags about the policy and other changes in UC implementation announced today.
The OBR normally gets sight of Budget policies in enough time to analyse them and judge how reliable the Treasury’s numbers are.
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