Why all the fuss over Universal Credit?

Tuesday 3 October 2017

The media reports highlight the human impact of the scheme and the politics, but one only has to recall the following basic information about Universal Credit to understand why it is running into trouble.

Share This Page

Email This Page

The media is full of reports about Universal Credit (UC). Online articles include: Roll-out of Universal Credit benefits reform is ''disaster waiting to happen''; ITV.com (Web), 11.09.17; Citizens Advice calls for Universal Credit 'pause', BBC news, 11.09.17; Universal Credit is in 'total disarray', says Labour, the Guardian, 15.09.17; The Universal Credit nightmare shows there’s nothing more dangerous than a good idea, New Statesman, 21.09.17, Theresa May urged to halt Universal Credit roll-out, BBC news, 29.09.17. The reports highlight the human impact of the scheme and the politics, but one only has to recall the following basic information about Universal Credit to understand why it is running in to trouble.

First, the way in which UC is delivered is different to legacy benefits (the benefits it is due to replace being (ESA(IR), HB, IS JSA(IB) WTC and CTC):

  • UC claims are made and managed online, rather than on paper or over the phone.
  • It is paid monthly in arrears, whereas most legacy benefits are paid fortnightly.
  • There is a link with the HMRC PAYE system so that Real Time Information about claimant’s earnings can be used in the calculation of UC.
  • It is solely administered by DWP (Department for Work and Pensions), rather than a combination of DWP, HMRC and LAs.
  • Benefit to cover housing rental payments is generally paid to the claimant, rather than direct to the landlord.
  • The amount which can be deducted from UC for debts or overpayments is considerably higher than under legacy benefits.

Secondly, the introduction of UC as a ‘full service’ for all claimants is proving controversial due to a number of features including: -

  • UC is paid monthly in arrears and it is an inherent part of the system that new claims are not put in payment for at least six weeks (a waiting period of 7 days, an assessment period of 4 weeks and a further 7 days before benefit is paid into the claimant’s account).
  • The lack of funds during the initial 6 weeks can cause or exacerbate debt problems, particularly rent arrears.
  • There are reports of processing delays within DWP, and incorrect information being provided to claimants which is leading to delays in submitting and paying UC claims.

There is growing evidence that Universal Credit is a social policy disaster in the making (Housing Network 25.09.17). For even according to the DWP’s own figures, 18 per cent of new claims did not receive any payment on time Universal Credit payment timeliness: January to June 2017, published 15.09.17. Even more damning are the figures being produced by social housing providers, viz:

Plymouth Community Homes, which has more than 14,000 social rented homes, said 69% of its tenants on Universal Credit were in arrears, compared to 29% of all tenants.

Gloucester City Homes, which has more than 4,000 rented properties, said 85% of its Universal Credit claimants were in arrears compared to 20% of all other tenants.

Islington Council in London said 81% of its Universal Credit claimants were in arrears, compared to 29% across all of its tenants.

Chesterfield Borough Council said 77% of its tenants in receipt of Universal Credit had rent arrears. (Source: Revealed: Universal Credit sends rent arrears soaring, Guardian, 17.09.17).

The picture in the private rented sector is worse. According to a recent Residential Landlords Association survey (published August 2017) of almost 3,000 landlords, of those with Universal Credit claimants as tenants, 38 per cent reported experiencing tenants going into rent arrears. In February 2016, that figure was 27 per cent. RLA Vice Chairman, Chris Town, said: “Whilst we continue to welcome the principle of simplifying the benefit system, it cannot be right that as it is currently designed, Universal Credit is leading many more tenants into rent arrears” (Source: Universal Credit forcing PRS tenants into rent arrears, RLA, 13.09.17).

Comment

Against this background of overwhelming evidence, will the Government push the pause button?  Don’t hold your breath. The DWP Spokesperson will no doubt be ready with words of comfort – ‘Almost half of all new claimants are now asking for payments in advance because they are unable to wait six weeks’. Which ignores the fact that advance payments are themselves recovered from future payments of Universal Credit and become yet another ‘debt’ the UC claimant has to cope with.

We are top ranked by independent legal directories and consistently win awards

+ View more awards