‘Universal Credit making families worse off’

A new report on the impact of Universal Credit on families in East London shows many feel worse off under the new system.

Woman with empty wallet


Most families in East London who are on benefits say they are worse off after moving onto Universal Credit, according to a new study.

It shows families are struggling to get by, are in debt and arrears as a result of being on the benefit and that payment in arrears and the five-week wait for claims are exacerbating the situation.

The study of the London Borough of Tower Hamlets by the Child Poverty Action Group shows the transition to universal credit has been problematic for claimants, with many confused about what, when and how to claim and some left without money during the transition period.

It charts confusion about the complexity of the system, problems with online system and a lack of digital and English skills and difficulty understanding payments. Families say payments can be stopped unexpectedly and identified the monthly payment system, advance payment arrangements and deductions as problematic.

Tower Hamlets has the highest rate of child poverty in the UK: 57 per cent, after housing costs are taken into account. In 2017, Tower Hamlets became one of the first boroughs in London to become a universal credit ‘full service’ area, meaning that anyone living in the borough making a new claim for income support, income-based jobseeker’s allowance, income-related employment and support allowance, housing benefit, child tax credit or working tax credit must claim universal credit instead, and make and manage their claim online.

The research found families found the process of making and chasing claims time-consuming and reported negative experiences with Jobcentre Plus and DWP.  A lack of training for Jobcentre Plus staff was identified in the report.

Claimants who were working generally felt that universal credit did not create good incentives to increase their hours, despite the fact that one of the system’s aims was to make these incentives obvious. Because universal credit is reduced immediately after earnings increase, claimants often felt that it was not worth working more hours.

Many parents are stressed and say they are anxious about losing their homes and/or not being able to provide for their children, says the report which also mentions the combined impact of Universal Credit and the housing benefit cap. Claimants were reported to be making significant sacrifices for their children – in one case, not eating for several days – and many noted that their children were missing out on the experiences that all children should be able to take for granted. Fuel and food costs were among the most problematic issues for parents.

Local authorities said they did not have the same access to information on Universal Credit problems as for housing benefit which meant that problems could go unresolved for much longer, with claimants accruing arrears and their homes being put at risk. Staff found it took much longer to resolve cases under Universal Credit and reported an increase in demand for advice. Landlords are also carrying significant arrears, with some private landlords reportedly now refusing to accept claimants receiving Universal Credit and the council having to spend more and more on payments to ‘incentivise’ landlords and prevent homelessness.

Although just over a tenth of families felt there was some positive potential for Universal Credit, 79% felt it was negative compared to the old system.

The report makes several recommendations, including for the local authority to continue to invest in advice services, digital support, clarify the system of support for residents in crisis and to write to the DWP urging Jobcentre Plus staff to proactively promote advance payments and hardship payments to universal credit claimants.

It says the Department for Work and Pensions should, among other things, ensure that universal credit provides claimants with enough to live on, meeting their housing costs and the needs of both adults and children in the household; should remove the benefit cap; end the five-week wait for the first universal credit payment; offer better training to work coaches to ensure more consistency across the board; provide family support workers in job centres to support claimants with children; and offer advance payments to claimants who have been on universal credit for less than six months and who are moving into the private rented sector, so they can use them as deposits.

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