Why the benefit used by over 8 million people may not be fit for the future

The roots of a welfare transformation

Nestled in Glasgow’s eastern district, Easterhouse once symbolized the pitfalls of post-war housing projects. Initially designed as part of a vast initiative to expand housing, the neighborhood was plagued by substandard dwellings, minimal local amenities, and limited transport connections. By the 1970s and 1980s, it had become emblematic of stagnation, with high rates of alcoholism, unemployment, and despair. Gang-related violence was common, but a pivotal moment arrived in 2002 when Conservative leader Iain Duncan Smith visited the area. His inspection sparked a sweeping overhaul of the welfare system, ultimately leading to the creation of Universal Credit—a program now supporting more than eight million individuals.

Reforming incentives for work

Duncan Smith’s vision centered on encouraging employment, aiming to eliminate the disincentives that kept people reliant on benefits. By consolidating six working-age benefits into a single monthly payment, the system was designed to simplify access and ensure that work remained financially rewarding. “The old system required a maths degree to determine if moving into work was beneficial,” noted Joe Shalam, policy director at the Centre for Social Justice (CSJ) and former advisor to the Department for Work and Pensions (DWP). “Universal Credit represents a major upgrade, reigniting job incentives for hundreds of thousands.”

Shifting challenges in a changing landscape

Yet, as Universal Credit nears completion—nine years late and exceeding budget by hundreds of millions—the system now grapples with new complexities. Recent data reveals a surge in graduate unemployment, with 700,000 now claiming benefits, a 46% rise since 2019. Meanwhile, mental and behavioral issues account for nearly half of all incapacity benefit claims, up from a quarter in 2002. Projections indicate annual spending on health and disability-related benefits could climb from £65bn to £100bn by 2029. The government characterizes the current framework as “encouraging sickness,” asserting that reforms will address this.

Design flaws and financial strain

Universal Credit’s structure, however, has drawn criticism. A four-year freeze on working-age benefit levels, imposed during the 2015 election, diminished its effectiveness, contributing to financial hardship for families. The system’s requirement for a five-week waiting period before first payments have also sparked debate. Many low-income households lack savings to cover this gap, forcing them to take on debt. While the Department for Work and Pensions offers interest-free advances, these are later deducted from subsequent payments over two years. Citizens Advice reports that in 2025, two-thirds of those repaying loans also required assistance with food banks.

Can the system adapt?

David Mendes da Costa, a policy manager at Citizens Advice, highlights the system’s unintended consequences: “Universal Credit was meant to be a safety net, not a trap that burdens people from day one.” As the welfare landscape evolves, questions remain about whether the program can effectively meet modern needs. The original hope for a simpler, more motivating system has been tested by rising costs and changing societal demands.