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Universal Credit is Forcing Britain’s Most Vulnerable Into Deeper Poverty and Debt

Universal Credit is Forcing Britain’s Most Vulnerable Into Deeper Poverty and Debt
Thu, 7/21/2016 - by Gabrielle Pickard-Whitehead

The U.K. government’s new welfare system known as Universal Credit has been criticized as "flawed" for forcing vulnerable welfare claimants further into poverty and debt. The Tories’ flagship benefit system was freshly scrutinized following research conducted by Citizen’s Advice Scotland (CAS). The year-long study, Learning From Testing Times, published in June, found that as the welfare scheme gets rolled out around the country, claimants are facing hefty delays in receiving benefits, unfair sanctions are being placed on them, and the scheme is plagued by technological glitches.

Universal Credit (UC) represents a sweeping reform of the current system, replacing six existing means-tested benefits for people of working age and on low incomes in Britain, including job seeker’s allowance, tax credits and housing benefit. The benefit is also available to those unable to work due to disability or sickness. This monthly paid benefit has been introduced gradually across Britain in recent months.

Despite being an attempt to make the welfare system simpler, UC's design means anyone being moved onto the system has to wait 42 days or more before they receive their first payment. Being forced to wait several weeks prior to receiving money means that vulnerable people on low incomes are struggling to find the funds to meet basic living requirements such as bills for food and rent. CAS, which authored the study, has called for urgent action to prevent further damages caused by the flawed system.

The report lists three specific flaws in the administration of UC, including a six-week delay to receive a first payment; challenges caused to claimants by shifting the system from weekly welfare payments to one single monthly payment; and the fact that the system is primarily online, meaning approximately 20% of claimants will struggle to use the new arrangement.

The evidence presented in CAS’s report is based on real-life experiences of UC claimants. Rob Gowans, CAS spokesperson, said in a statement about the UC flaws: “For those who rely on the system, the impact of its failures is very real. Sick, disabled, unemployed and low-income families deserve a social security system that is worthy of the name.”

The CAS spokesperson added that if the UC problems identified in the report aren't urgently addressed, “the system really could cause serious detriment to some of the most vulnerable people in our society.”

In a separate report on the welfare system reform, similar issues were highlighted. Compiled by landlords who manage 200,000 social homes in England, the study found that out of 3,000 tenants in social housing who are in receipt of UC payments, 79% of them were in rent arrears.

Half of these tenants had not been in arrears prior to moving onto UC. According to respondents in the survey, the primary cause of rent arrears is due to long waits in payments. The landlords surveyed for the study also reported there had been an increase in demand from tenants for advice about debt, charity food parcels and local hardship funds.

In 2015, a Citizens Advice study found that the troubled UC system means vulnerable claimants are becoming increasintly dependent on food banks in order to put food on their families’ tables. Reliance on food banks has been on the rise in Britain in recent years, with studies showing that benefit sanctions and the shrinking of the welfare safety net are the principle reason why 10 to 30 percent of food bank users are being referred for food aid.

Universal Credit has been directly implicated with an increase in benefit sanctions. Last year, the New Policy Institute warned that UC is likely to lead to an increase in welfare sanctions due to the introduction of the "claimant commitment" for working families on low incomes. When an individual signs up to receive UC, s/he need to accept a Claimant Commitment, which sets out what s/he has agreed to do to prepare to look for work, and to increase their earnings if they are already working. The Claimant Commitment is based on personal circumstances and is reviewed and updated on an ongoing basis.

Despite being designed to encourage claimants to find more or better paid work, critics of the UC system argue that being subject to conditionality will mean people are at risk of having benefit sanctions imposed on them. As the NPI report highlights, “The sanctions system has not been administered well – for example, the automatic referrals from Work Programme providers, or the high proportion of sanctions that are overturned on appeal, or the abiding reports of ‘expectations’ of reaching certain numbers for sanctions.... Expanding massively the scope of conditionality and sanctions to new areas is an alarming prospect in light of this."

It’s no secret that Britain’s most vulnerable are suffering under the Conservative’s tough program of austerity. Cuts to local authority services are having a profound impact on communities, and it is the poorest of communities which are being hit the hardest. According to experts in Scotland, “welfare reform and austerity measure are blighting the lives of disadvantaged Scots and breaching their human rights.”

By being “disproportionately affected,” changes to benefit systems and cuts driven by austerity have amounted to “discrimination against women, disabled people and ethnic minorities,” said the Scottish Human Rights Commission.

Ahead of the E.U. referendum, Labour Party leader Jeremy Corbyn urged voters to direct their anger toward the Conservative government’s austerity measures instead of immigration, claiming that pressure on Britain’s infrastructure would not disappear in the wake of a Brexit result.

“It’s a failure of our Government to properly fund local authorities, it’s a failure of our Government to provide housing for people, it’s a failure of our Government for the first time in 20 or 30 years attacking school budgets," Corbyn said. “That is the problem, and they should turn their anger towards the Government and the austerity that’s been put forward by Cameron and Osborne over the past six years.”

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