As CIH Scotland submits evidence to the Scottish Parliament’s social security committee, policy and practice manager Ashley Campbell takes a look at some of the current problems with Universal Credit.
In 2010 the Coalition Government unveiled plans that would shake the foundations of the welfare state. Their flagship reform, Universal Credit, would replace six benefits with one, meaning that applicants would only have to fill out one form and would receive one monthly payment in arrears just like a salary. It was proposed that mirroring the world of work would make it easier for people to manage wages and household budgets.
More generous work allowances would mean that people could keep more of their benefit as their wages increased, unlike the old system that withdraws benefits much more quickly often resulting in little or no improvement in income for taking on extra work.
However, our analysis has shown that cuts to the Universal Credit work allowance included in the 2015 budget now make the move into work much less attractive for some households, particularly single parents who might already face difficulties getting back into work after taking time out or balancing work with childcare.
In order to meet the Minimum Income Standard set by the Joseph Rowntree Foundation, a single parent living in the social rented sector with a typical rent would have to earn gross pay of £446.90 per week. That’s the equivalent of working 57 hours a week at the National Minimum Wage – and that’s without taking child care costs into account.
Private tenants face an even steeper challenge due to higher rents and caps on the amount of help that they can get through the Local Housing Allowance (LHA). LHA is supposed to cover the cost of renting a home in the cheapest 30% of the local market. However, rising rents and a freeze on LHA has meant that some people are experiencing a huge shortfall between the amount of benefit that they can claim and the cost of their rent.
Scottish Government figures show that LHA only covers 30% of the market for 10 out of 90 LHA rates. In one area, the shortfall amounts to over £80 per week. As such, we have called for the UK Government to urgently review LHA rates and end the freeze.
Universal Credit is simply not delivering on one of its basic fundamental principles, to make work pay. In addition, we know there have been a myriad of issues with the implementation of Universal Credit to date.
New applicants can expect to wait five weeks before receiving their first payment – if everything goes smoothly. In reality, thousands of people are left waiting for months because of errors, IT problems or lack of support with the online application system.
A recent report from the national Audit Office showed that in 2017 around a quarter of new claimants were not paid in full on time facing an average delay of four weeks (on top of the five to six week waiting period). From January to October 2017, 40% of late payments took 11 weeks or more and 20% took five months or more.
This certainly does not reflect my experience of work. Imagine the chaos and the outrage if a quarter of the workforce in Scotland didn’t get paid on time.
The Trussel Trust handed out 170,625 emergency food parcels across Scotland last year. That’s a 17% increase on the year before and a staggering 1,088% increase since 2012/13.
Many people are struggling to pay their rent under Universal Credit leading to the risk of homelessness in the short term and some landlords declaring that in the longer term, they simply won’t rent homes to people who are on Universal Credit.
These issues have mostly been put down to teething problems. The Government has indicated that it is in ‘listening mode’ learning from a gradual roll out and making necessary changes. In fact, a number of concessions have already been made including reducing the initial waiting period from six weeks to five and dropping charges for the telephone helpline.
These changes are welcome but they are not enough. In light of our recent findings, we are calling on the Government to reverse the cuts to work allowances, urgently revise LHA rates and put an end to the freeze if they really are serious about making work pay.
- Read CIH Scotland’s submission to the Scottish Parliament’s Social Security Committee’s call for evidence on Universal Credit and in-work poverty
This article was originally published on the CIH Scotland website.