U-turn on Universal credit but it won’t stop the roll out!

The Tory Budget today unveiled a U-turn over Universal Credit – pouring £1.7billion a year more into the stricken benefit.

The Rollout needs to stop and real life issues fixed before it continues to cause more problems for both working and non working families.

Chancellor Philip Hammond finally acted after furious MPs including his own Tories warned families were being driven to rent debt, food banks and the brink of suicide.

“I recognise the genuine concerns. First the implementation of this programme, it is an enormous undertaking. I have already delivered £3.5bn to help with the transition, today I can go further with package of additional measures worth £1bn over five years to introduce additional protections.

“I have heard concerns about rates and allowances in the system. I am increasing work allowances in UC by £1k per annum at cost of £1.7bn annually once rollout is complete, benefitting 2.4million working families with children and people with disabilities by £630 a year.”

The Chancellor has declared that Universal Credit is “here to stay,” and announced 1 billion in funding to address concerns about the Government’s flagship welfare reform.

During his Budget speech Philip Hammond revealed the Treasury would be giving £1bn over five years to the Department for Work and Pensions to help ease the transition to the controversial benefits system when it rolls out nationally from next year.

He also said he was increasing the work allowance – the amount that claimants can earn before Universal Credit begins to be withdrawn – by £1,000 a year at a cost of £1.7bn annually. This move would help 2.4 million working families with children and people with disabilities by £630 per year.

None of this will address the issues and problems both in work and working families are experiencing with Universal credit.

The entire rollout should have been put on hold until problems in transition are solved.

The unintended and unfortunate consequences

Under the old system, the goal was to pay benefits within two weeks of a claim. Under Universal Credit, there is a formal waiting period of one week with no money, with the benefit then being paid monthly in arrears – the intention being that this more closely mirrors what it is like to be in a job. In practice, many of those earning less than £10,000 a year are in fact paid weekly.

The effect of this ‘discipline’ in practice has led to an in-built wait of six weeks before people get their cash – three times as long as the old system – and the Department for Work and Pensions admits that in around a fifth of cases it is failing to meet even that target, partly because of the information demands it places on the claimants.

Waits of ten or twelve weeks are not uncommon.

The overall effect has been to plunge people already on low incomes into rent arrears and debt and in some cases homelessness. In others cases, it has caused job losses – the very opposite of what Universal Credit is intended to achieve.

The Commons Work and Pensions Committee has been hearing in detail evidence about these effects and bodies as diverse as Citizens Advice and the councils in areas where Universal Credit has been rolled out so far have been telling the Government about this for many, many months.

Compounding the problems

Despite these problems, the next big roll out of Universal Credit is set to go ahead, and what are already major problems look set to be compounded, as The Times among others have recently highlighted.

Apart from the ideological step of making the benefits mirror a monthly salaried job – when growing numbers at the lower end of the labour market are on ‘zero hours’ contracts or other forms of the ‘gig economy’ – the six week wait was incorporated, to put it crudely, to save money.

It is just one of the many cuts to the level of support offered by Universal Credit that have been introduced since its inception, to the point where even some of its proponents fear it has become too mean to work for those it sought to help.

Universal Credit would still be Universal Credit without the six week wait. Imposing it was a policy choice, not a necessity, and a choice that can be undone. The answer has to be a shorter wait and not just the loans that claimants can theoretically claim, but which many don’t know about which in any case just bring new problems.

1 Billion will not solve the issue only a simple stop and puse can do that.

If the Government does not act before the further roll out of Universal Credit to hundreds more offices, it will cause immense hardship and bring the Universal Credit approach into further disrepute.