Universal Credit: the good, the bad and the ugly
It’s been all over the news recently, but what actually is Universal Credit? And why is everyone talking about it?
Universal Credit is a single monthly payment for people both in and out of work. It brings together what are now known as the ‘legacy benefits’, which include Housing Benefit, Child Tax Credit and Income-based Jobseeker’s Allowance. It was designed to bring ‘fairness and simplicity’ to the welfare system and will make things smoother as people move in and out of work.
The benefit has been in its trial stage since 2013, but now the Government has moved to increase its roll out to 50 new job centres each month from November. Here at CAP we stood alongside other organisations, such as Citizens Advice, in a call to halt the roll out to resolve the problems we’re seeing before this.
But now the roll out is going ahead, what concerns do we have?
When someone makes a claim, it takes six weeks for their first payment to appear in their bank. This long wait is built into the system, because it includes a four-week assessment period and two weeks of processing. The Government expects claimants to live off their savings for this period, or apply for advance payments, which is a loan of 50% of the anticipated monthly payment. At CAP we know that a high proportion of people we help do not have savings to fall back on; in fact, of those seeking help last year, 92% had no savings at all.
Case study: Six-week wait
CAP clients Frank and Celia had been without an income for several weeks before they approached us for help. Frank has mild learning difficulties and Celia has a range of mental health issues including depression. Whilst waiting for their Universal Credit payment they were advised by the local Jobcentre Plus to take an advance payment. Frank and Celia were afraid to do this because they didn’t think they could afford to pay it back. As a result, they’ve been living off foodbanks and relying on other families to feed them. The waiting period has caused great distress to the couple, particularly because Celia believed they would be evicted from their home.
Another problem we have seen is the high level of debt repayments deducted straight from people’s monthly Universal Credit payments. For those who receive an advance payment, it can take months to pay this back and mean living off a reduced income for a long time.
Case study: Deductions
Sally built up over £2,000 of rent arrears as each month her Universal Credit deductions meant she was unable to pay her rent in full. The lack of full payment meant that her landlord is looking to evict her. If the deductions had been less severe, she would have been able to afford her rent.
The application process is also proving to be difficult for people who are digitally excluded or without computer skills. Applications for Universal Credit are made online, but one in five CAP clients don’t have internet access either at home or on a smartphone.
Case study: Online applications
Keith and Janet were told they needed to apply for Universal Credit. As the claims are made online this was difficult because they don’t own a computer and are not computer literate. During their assessment period Janet received an email from the Jobcentre asking her to come for an interview, but she was unable to read the email and consequently didn’t go. As a result, her claim was suspended and she had to restart the application process, meaning the couple had to go even longer without an income.
There has been some positive progress – we were pleased to see the Government promise to make the Universal Credit helpline free, as it had previously cost up to 55p per minute to call. That being said, we want to see the Government take further steps in preventing the hardship that we’re still seeing across Universal Credit full service areas.
Here at CAP we want to highlight the problems we’re seeing across our network. We’re talking to MPs and other influential bodies, presenting evidence and standing alongside other organisations calling for the Government to make changes to Universal Credit. We continue to be a voice for people facing financial hardship, speaking up for those struggling to get by and we hope to see change happen.