The government’s controversial Universal Credit was introduced to Greenwich borough this week, completing its roll-out in south-east London. Greenwich & Woolwich MP MATTHEW PENNYCOOK writes for 853 on why the new system isn’t working – and why the government needs to take action.
Universal Credit is failing.
Beset by delays since its introduction and subject to sustained critique both from inside and outside parliament, the Conservative Government has nevertheless ploughed ahead with the rollout of the Coalition Government’s flagship welfare reform.
On Wednesday, the full Universal Credit service for all claimant groups in Greenwich borough was launched in Woolwich Jobcentre.
If you don’t happen to claim entitlements of any kind, you may be reading this and wondering why on earth you need to care. But you should. Universal Credit is the biggest shake-up of benefits since the welfare state was established.
By the time it’s fully implemented in 2022, around seven million families will be claiming it. That’s around three in ten of all working-age families. Even if you never have to apply for Universal Credit yourself, there is a good chance that one of your friends or neighbours will.
The opposition to Universal Credit – which merges six existing benefits, including housing benefit and child tax credits, into a single monthly payment – has little to do with the underlying aims of the policy.
Indeed, there is broad consensus across the political spectrum that its underlying rationale – to simplify the benefits system in a way that makes work pay, that enables people to easily move in and out of low-paid work without losing access to entitlement altogether, and that has fewer “cliff edges” around housing, work and childcare – is a worthy one.
It’s just that, in practice, it’s been hugely problematic.
Cuts have made it worse
As a damning report published by the National Audit Office in June laid bare, its implementation has been badly mishandled. And its purported advantages were hobbled from the outset by swingeing cuts that were baked into the scheme by the then chancellor, George Osborne.
The result is that Universal Credit is now running years behind schedule. Its employment impacts cannot be accurately measured, its stated aims of getting an additional 200,000 people into work and costing less than the previous system are unlikely to be realised, and it has caused significant hardship to those that have already transitioned onto it.
The Resolution Foundation now forecasts that the introduction of the new system will leave approximately 2.5 million low-income working households worse off by around £1,000 a year on average.
Women, ethnic minorities, single parents and disabled people will be particularly hard hit. In a recent survey carried out by the Department of Work and Pensions itself, half of Universal Credit claimants who took part reported that they were in either housing arrears or financial difficulty and half reported having to get additional financial support just to get by.
It’s therefore no surprise that I’m not alone in feeling deeply troubled about what the introduction of the full service across Greenwich borough will mean for the more than 9,000 local families (including just under 17,000 children) that Child Poverty Action Group estimates will eventually claim Universal Credit.
Indeed, as I sit in my office in the Commons writing this piece, I’ve already received seven emails from local residents who were notified on Wednesday that they needed to apply for Universal Credit, but have absolutely no idea what it is, let alone how it might affect them.
Five-week wait for first payment
Greenwich Council, local advice agencies and my small team of caseworkers have spent months preparing for the rollout, but it’s still difficult to know exactly what types of issues will be most prevalent locally and, in any case, with limited resources there is only so much we can all do.
The problems we can almost certainly expect to surface will be those that have plagued claimants in other parts of the country where the full service has already been introduced. Perhaps the most notorious is the mandatory five-week initial wait for the first Universal Credit payment to arrive after a successful application has been made (three times as long as the old system and incorporated into Universal Credit purely to save money).
Alarmingly, the DWP admits that in around a fifth of cases it is failing to meet even that five-week target, with waits of 10 or 12 weeks not uncommon. Pressed on the issue, ministers fall back on the argument that claimants can apply for an advance in order to avoid undue hardship. But most claimants are not aware these advances exist or that they are in fact loans that are subsequently clawed back through large deductions from future payments.
All the available evidence suggests that this five-week initial waiting period, which for many will mean five weeks without any income at all, is driving large numbers of claimants to foodbanks and forcing many more into rent arrears with the result that an increasing number of private landlords are refusing to rent to Universal Credit claimants at all.
In other cases, the five-week wait has led to job losses – the precise opposite of what Universal Credit’s cheerleaders claimed it would achieve. Coupled with the stringent conditions that are an intrinsic element of the system and a punitive sanctions regime that can easily lead to payments being temporarily withdrawn, the initial payment delay has meant that Universal Credit is a gift to predatory lenders.
Universal Credit is causing suffering
Government ministers are well aware of the hardship that Universal Credit has already caused and they’ve known for some time. Yet publicly they resolutely refuse to accept that it is causing suffering and continue to insist, despite the absence of any evidence, that the new system increases employment and earnings.
In its June report, the National Audit Office concluded that it’s now too late to abandon Universal Credit entirely. That may well be the case. But it’s not too late for this Government to admit that it has a very serious problem on its hands and to take steps to limit the damage.
The only sensible course of action is to pause the continued rollout of Universal Credit to allow for the flaws in its design to be addressed, for further safeguards to be put in place to protect vulnerable claimants and for the cuts that have exacerbated its more punitive aspects to be reversed.
Tinkering around the edges is not enough. If the Government insists on pressing ahead regardless, the only result will be widespread economic hardship for thousands of local families and many tens of thousands more across the country.
Matthew Pennycook is MP for Greenwich & Woolwich. You can contact him via matthewpennycook.com. For help with understanding Universal Credit, see the Greenwich Council website or the MoneySavingExpert.com guide.
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