‘Cut to the bone’ - our clients talk about life on Universal Credit
Chances are, you’ve noticed Universal Credit making the headlines a lot lately. At CAP, we work directly with people who are being affected by it, so we asked them what it’s really like to apply for and receive Universal Credit.
Universal Credit – what is it?
The big idea behind Universal Credit is to simplify a range of benefits and tax credits into a single payment. It’s being rolled out in stages, so some people are already using it while others are still on the old system.
In theory, that all sounds sensible, but what do CAP’s clients say?
Making the switch
Just applying for Universal Credit can be a challenge. The lengthy form is online: great if you want to save trees, bad if you don’t have internet access, and 22% of our clients don’t have internet at home. Our client Alison* tried to apply over the phone instead, and this was her experience:
‘I was on hold forever and I didn’t have the money on my phone. I have no Internet at home so I walked to my local library which is quite far away... The form was quite long and I only had one hour to complete it. I did struggle to remember my past addresses. I’ve been homeless before and have had lots of care-of addresses, so it’s hard. The ID was also tricky because I’ve never had a passport. I had to buy new copies of my birth certificate.’
Once the claim is in, there’s a five week wait before the first payment. That’s five weeks without the benefits you’ve been living on. One single mum resorted to selling her belongings and another client was threatened with eviction because they couldn’t pay the rent during this time.
Getting in debt
To cover that five-week gap, there are ‘advances’ available. These are interest-free loans. While there’s no denying it’s good to have something to live on, it immediately puts you in the position of owing money that you have to repay within the space of a year. So as soon as you switch to Universal Credit, there’s a chance you’ll be in debt.
Everyone we spoke to said the repayments were too high for them to afford. One client said: ‘I read one line on a website that said, “We will take it back from your payments at a rate you can afford”. Well I shouldn’t have trusted them... as soon as I got the award for the benefits, I was down to £60 a month straight away.’
In practical terms, this meant people fell behind with household bills and had to use foodbanks.
But another side to debt and Universal Credit is that debts can be collected from your monthly payments, and some people are surprised at the proportion that can be taken for this. Imagine paying your rent and then having almost a third (30%) of your remaining income taken away. What would you have to go without to make ends meet?
Another of our clients said: ‘Every month, I’m ringing people to say I can’t pay, even though I’ve only got very small bills. I pay £9 a month for phone, I don’t have internet, I don’t have Sky or anything like that. Everything is cut down to the bone and I’m still living hand-to-mouth. I try not to go to the food bank when I don’t have to but I’ve always been using the foodbank while I’ve been on this benefit.’
If you’re on a low income then, put simply, you need to be brilliant at budgeting to get by. You might have heard that switching to Universal Credit means any fortnightly benefits you received move to monthly payments. But what’s less well known is that Universal Credit payments can fluctuate dramatically, and clients said they often didn’t know how much money they would be getting that month.
‘I work 22 hours a week and I find it very difficult to budget because my Universal Credit payment fluctuates so much. It’s never what they say it’s going to be. I look at my online account and it shows a figure but you can’t rely on it. It can be a big change, like £300.’
This is particularly a problem for clients who have paid jobs. If their wages come in more frequently than once a month then the system may miscalculate how much Universal Credit they’re owed.
What’s more, Universal Credit will cover up to 85% of a claimant’s childcare costs (up to a limit), but you still have to pay these costs up front and then reclaim them. Most single parents on low incomes simply don’t have the money to do this. Sadly, one of our clients lost their childcare place while waiting for their first Universal Credit payment, which then led to them then losing their job.
It’s safe to say there’s a lot of problems here. But that’s perhaps unsurprising with such a huge system, which will eventually be used by one in four UK households. The good news is there are people in government who are keen to listen to CAP’s voice and make the changes needed to make Universal Credit really work.
Want to know more about what our clients said about Universal Credit? We’ve produced a series of papers sharing the results of our survey. They’re full of stories from our clients’ real experiences.
*Client names changed to protect privacy