The drip-drip supply of Universal Credit stories continues. On the eve of their party conference, the Daily Telegraph reports today, several Conservative MPs have broken ranks and called on the government to pause the Universal Credit roll-out, warning that the fall-out could be as bad as the Poll Tax.
Announced in 2010, this October was supposed to be Universal Credit’s finest hour, with the benefit fully rolled out. But as things stand, it’s reached only half a million people, just under ten per cent of its expected case load in the long run, and won’t be fully implemented until 2022 at the earliest.
Tragically, that’s the good news. Universal Credit, in its current form, is chaotic, flawed and—despite once being the government’s flagship anti-poverty policy—now poverty producing. Analysis by the Child Poverty Action Group published earlier this year shows that the cuts the government itself has made to the original version of Universal Credit will put a million children into poverty.
In its initial design, the Department for Work and Pensions (DWP) claimed Universal Credit would reduce child poverty by 350,000. That got revised down to 150,000 when its budget was salami-sliced by Coalition cuts.
But it was George Osborne’s Summer 2015 Budget that was the real game changer. While everyone’s attention was on Iain Duncan Smith’s fist pump response to the Chancellor’s partial—and misleading—rebranding of the national minimum wage as a “national living wage,” welfare watchers spotted that the Chancellor had pulled the rug out from under the feet of Universal Credit. A Treasury which made no secret of its scepticism about the policy took a massive chunk of the Universal Credit budget and slashed (or in some cases, got rid of) the work allowances in the system—a key plank of the policy.
Cutting work allowances (the level of income above which Universal Credit starts to be withdrawn) undermines the intention of Universal Credit to make work pay. On top of this, the premium paid for the first child was removed in April this year at the same time as the two-child limit on benefits was introduced.
"As things stand, Universal Credit has reached only half a million people—and that's the good news"But even without the cuts, the very design of Universal Credit is causing huge problems. Many claimants are expected to wait six weeks—with some waiting even longer—for their first payment. Incredibly, making families on low incomes wait for help at the time when they most need it is a feature of the system.
The argument the DWP makes is that people who lose their job will have a month’s wages to tide them over. Of course, the reality is that many people at the lower end of the labour market are paid weekly or fortnightly. They therefore face debt and destitution because of this gap in income, having to turn to food banks and risking losing their homes because of rent arrears. We know housing associations are alarmed about the arrears facing Universal Credit claimants. According to the government’s own figures, nearly half of new Universal Credit claimants got a benefit advance while they were waiting for their first payment—suggesting they couldn’t cope in the interim. And we know that not everyone is told that advances are available to them. What’s more, benefit advances have to be paid back—another debt burden to place on an already vulnerable population.
But the problems of Universal Credit are not confined to its much reduced funding and design flaws. Hard-pressed and often low paid DWP staff are clearly struggling to cope with three complicated benefit systems—the legacy system (the benefits being replaced), the live service of Universal Credit (the interim version of the benefit designed for people with straightforward cases) and “full service” Universal Credit, the new system for all. It’s not surprising that chaos and confusion is common, with claimants often wrongly advised.
Through Child Poverty Action Group’s Early Warning System, we have heard about many people who have had difficulty with their claims. Online claims can “disappear”; payments can be lower than they should be because of inaccuracies in the “real time information” provided by HMRC; and some claimants are not getting the right amount for their housing costs, leading to an increased risk of eviction.
The roll out of Universal Credit picks up speed significantly next month—with more than 50 new areas implementing the new system in October alone. When the roll out is complete, Universal Credit will be claimed by almost half of all families with children.
Unless ministers pause the rollout and fix the fundamental and systemic issues undermining it, Universal Credit will be rolling out poverty and misery.
