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“Universal Credit has failed and needs to be reformed”

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By Caleb Nelson


An extra £1 billion has been pledged for those on Universal Credit, the Chancellor of the Exchequer revealed during this year’s budget announcement. Sounds like a good deal for everyone, right? Not necessarily.

Taking a closer look at the realities of those on Universal Credit, we find that some are being left six weeks without payment, which is forcing them to take out loans and use foodbanks to keep themselves alive.

It has been stated that around a third of families on the new scheme are losing £1000 a year compared to the old job seekers allowance. Some are now living on less than £50 a week, which leaves us questioning how the poorest families are they expected to get by amidst rising living costs.

Dr Chris O’Leary, Manchester Met Deputy Director of PERU, who has a special interest in the public sector reforms and social policy, discusses the results of his latest research.

To put the timescale of technology and government into perspective, Chris explained the process of changing GP, the healthcare sector still uses the paper system so it can take up to six weeks for your records to be transferred to a new GP; this is much the same for the universal credit scheme.

Chris explained: “Universal Credit is reliant on IT and as shown from the NHS, this has not been implemented well, which is why the full rollout has been continually delayed.”

This could cause the full rollout to cost and take longer than initially expected, as did the NHS IT system, projected to take £5bn over five years and actually took £12bn over 12 years and as seen in the 2018 budget, an extra £1bn has been dedicated.

Universal Credit has replaced six different benefits, each of these had different rules and requirements, which were very costly to administer, and this is what cost the government more to manage than they paid out to claimants, which may be one of the reasons for the new system.

However, on the new Universal Credit, Chris stated that, “It can take between 8-12 weeks to work out deductions when you receive more hours at work for example, and this may even cause payments to stop completely. Also, the taper rate is set so high on this system that people don’t work extra hours because they will end up with only slightly more than if they did not accept the extra hours, so his system does not encourage work, in fact it discourages it.”

This restriction on working hours with the taper rate means that people will be unable to get more hours and move up in the workplace, resulting in them continuing to be reliant on the Universal Credit scheme, rather than moving on and being able to support themselves.

Universal Credit allocated the same to each person whether they have children or are disabled or not. This means that low-income families may have been forced to rely on foodbanks due to the cut in their benefit payments.

The scale of this problem though, it skewed by the monitoring of foodbanks, with figures about visitors are overstated as heads are counted, but not the number of times one person may visit. This means that one person may visit three times a week but will count as three separate people when put into a statistic, making it look like far more people use foodbanks than actually do.

Chris has also revealed how those on Universal Credit are affected in terms of paying for their rent. He stated, “Universal Credit is used to pay some of a person’s rent costs and is worked out using an average from a specific area rather than basing it on the house and area where you are renting. The rate is 30% of the rent figure and this figure has been frozen for the past 4 years.”

Due to this freeze, the gap between Universal Credit payments and rent prices has grown which in turn has caused people to turn to charities for their basic everyday needs.

He added, “Since the 2008 housing allowance, the number of willing landlords has decreased whereas the number of people needing housing has increased.”

This has led to more homelessness and forced some to take out loans to pay the rent costs, then more loans will be used to pay off other loans, and again due to people having to choose between rent and food, they are relying more on foodbanks after spending all they have on a place to live.

O’Leary adds, “The new system is supposed to give people choices in life but in most cases, it is taking people’s freedom away.”

This point highlights the struggle people face in being limited on the hours a week they can do without being sanctioned. Despite increasing the number of working people from the scheme, this has not transpired to a better, regular incomes for the poorest in society. The resounding opinion is that Universal Credit has failed and should be reformed.

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