Universal Credit ‘failing millions’ as report calls for major changes

Many people have suffered problems with the Universal Credit system ever since it replaced Jobseeker’s Allowance and Child Benefit.

A parliamentary report has now found the six-in-one payment has been “failing millions of people”, particularly the “most vulnerable”, prompting the Lords Economic Affairs Committee to call for a radical change of the system.

The controversial benefits change was rolled out in JobCentres across the South West in late 2018, early 2019 and since, PlymouthLive has heard from dozens of people struggling to live on the benefit.

Many have claimed they have lost out on money, or been bamboozled by red tape and administrative confusion.

One single mum told Plymouth Live she had been stung by the benefit cap – brought in by the previous Coalition Government in 2010 – and faced legal eviction from her home because of her wrangle with the benefits system that forced her into rent arrears.

Claire Wilkinson said it was never made clear to her how much she was ever entitled to – and her nightmare wrangle with the system compromised her mental health.

The Manadon woman claims she never got anywhere near the limit set for single parents – £13,400 a year. Or equivalent to £257 a week.

Disabled Plymouth man, Neil Wright, also shared his story after receiving a payment of just 1p and being left with 77p to live on for two weeks.

The 50-year-old who suffers from acute arthritis and can’t work, said he was unable to fathom why his usual monthly UC payment of £284 turned into a bank deposit of just a penny.

But he did get £163.98 in Employment Support Allowance (EESA), a disability benefit he is not supposed to be receiving any more, after he was shifted into the catch-all UC system.

His last communication from the Department for Work and Pensions said he would receive nothing on December 14, 2018, but 1p then went into his bank.

Universal Credit ‘responsible for rent arrears and food bank usage’

The recent study by the committee stated Universal Credit is responsible for “soaring rent arrears and the use of food banks”.

The committee stated: “Cuts to social security budgets over the last decade is causing widespread poverty and hardship.

“Universal Credit needs urgent investment just to catch up and provide claimants with adequate income.

“The temporary increase in the standard allowance in response to the Covid-19 pandemic shows that the previous level of awards was too low.

“The increase should be made permanent.”

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In a scathing assessment of how UC is working, the committee stated: “The Government is using Universal Credit to recover debt, mostly £6 billion of historic tax credit debt.

“Deductions of up to 30% of the standard allowance, and in some cases more, can be taken from claimants.

“This has left many households with less money than they are entitled, often at no fault of their own.

“Tax credit debt should be written off as it is unlikely to be repaid.

“The five-week wait for the first Universal Credit payment is the main cause of insecurity.

“This wait entrenches debt, increases extreme poverty and harms vulnerable groups disproportionately.

“The Government should introduce a non-repayable two-week grant to all claimants.”

‘Universal Credit punishes the poorest’

The committee said the “punitive nature” of UC “punishes the poorest by taking away their sole source of income for minor infractions” and needs rebalancing.

Committee chairman Lord Forsyth of Drumlean said the cross-party committee agreed with aim of UC, but its implementation needed change.

He said: “In its current form it fails to provide a dependable safety net.

“It has led to an unprecedented number of people relying on foodbanks and not being able to pay their rent.

“The mechanics of Universal Credit do not reflect the reality of people’s lives.

“It is designed around an idealised claimant and rigid, inflexible features of the system are harming a range of claimant groups, including women, disabled people and the vulnerable.

“Universal Credit needs more money to catch up after 10 years of cuts to the social security budget.

“It requires substantial reform to its design and implementation, the adequacy of its awards, and how it supports claimants to navigate the system and find work.

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“The five-week wait for a first payment must be replaced by a non-repayable two-week grant to all claimants.

“The monthly payment calculations which can result in big fluctuations to claimants’ incomes should be fixed for three months.

“Historical tax credit debt needs to be written off.

“The punitive nature of Universal Credit has not worked.

“It punishes the poorest by taking away their sole source of income for minor infractions.

“It needs re-balancing, with more carrot and less stick, particularly as large numbers of claimants will have ended up on it because of events completely out of their control.”

The main findings of the proposals for reform’ report

  • The Government must prioritise helping people into work, particularly with the increase in unemployment that the Covid-19 pandemic is causing. All claimants should have a work allowance, at a higher rate than now, to allow them to keep more of their award as they move into work. The Government should consider reducing the taper rate to ensure that the poorest in society do not pay higher marginal effective tax rates compared to the richest in society.
  • The conditionality requirements on claimants who can look for, or prepare for work, has been increased significantly over recent years. Less emphasis should be placed on obligations and sanctions. Instead, there should be more support to help coach and train claimants to find jobs or to progress in their current roles. Conditionality should be adapted to accommodate changing labour market conditions, including at the local level, particularly in the light of the economic impact of the Covid-19 pandemic.
  • The UK has some of the most punitive sanctions in the world, but there is limited evidence that they have a positive effect. Removing people’s main source of support for extended periods risks pushing them further into poverty, indebtedness and reliance on foodbanks. There is a substantial body of evidence which shows that sanctions harm people’s mental health. The Government should evaluate the current length and level of sanctions. It should also expedite its work on introducing a written warning system before the application of a sanction. Sanctions must be a last resort.
  • The Government is doubling the number of work coaches in response to potential levels of high unemployment. This may not be enough to support people to find work in a stagnant labour market with high levels of competition for jobs. A cap should be introduced on the number of cases for which each work coach can be responsible.
  • Paying awards on a monthly basis does not reflect the way many claimants live. It causes unnecessary budget and cashflow problems. All claimants should be able to choose whether to have Universal Credit paid monthly or twice monthly.
  • Including childcare support in Universal Credit was a mistake. Paying costs in arrears has been a barrier to in-work progression and in some cases, it has been a disincentive to work. The Government should remove childcare support from Universal Credit and be made into a new standalone benefit paid in advance.

Have you got a story to share regarding Universal Credit? Get in touch via email at katie.timms@reachplc.com.

Plymouth Live