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Universal Credit

Universal Credit

Universal Credit is being introduced in stages across the UK to replace the current benefits and tax credit system. Housing Benefit, Child Tax Credit, Income Support, Working Tax Credit, Income-based Jobseeker’s Allowance, Income-related Employment and Support Allowance will all be incorporated into Universal Credit. The roll out for Universal Credit in Worthing and Littlehampton is scheduled for July 2018 and June 2018 for Horsham.

Universal Credit is a single monthly payment for people in or out of work. For couples and family units, the payment will be made to one person in the household. The payment is made up of a basic ‘standard allowance’ and extra payments that might apply, depending on the individual’s circumstances. This can include: having children, children with childcare costs or disabilities, housing costs and disabilities or health conditions.

The introduction of Universal Credit will mean housing allowances will be paid to the customer, rather than directly to the landlord. Customers will be responsible for paying their rent regardless of whether they are in social or private housing.

The Department for Work and Pensions (DWP) says the system is designed to encourage better management of money. However, landlords are saying that it will result in rising rent arrears. Where the system has already being trialled, there have already been serious concerns: “Plymouth Community Homes, which has more than 14,000 social rented homes, said 69% of its tenants on Universal Credit were in arrears, compared to 29% of all tenants. Gloucester City Homes said 85% of its Universal Credit customers were in arrears compared to 20% of all other tenants….. ‘

Lessons have, to an extent, been learnt from the trials. For example, housing associations are being encouraged to identify tenants who will need support to apply for and manage their Universal Credit. Turning Tides and others agencies are concerned that this falls far short of what is needed to support the most vulnerable and at risk especially those in the Private Rented Sector (PRS). The vast majority of Turning Tides clients leave our projects to go into the PRS. Turning Tides is also concerned about those with learning difficulties or support needs that cannot easily be identified.

In the lead up to the introduction of Universal Credit, Worthing Homes, the social housing provider in Worthing, are putting steps in place to protect themselves and their tenants. The organisation has two Financial Inclusion Co-Ordinators who support tenants with benefit and budgeting advice. They have been helping residents sort through the complexities of Universal Credit, spending up to 10 hours with some residents. When the full roll out is introduced, they predict some 400 residents a year will be claiming Universal Credit and the organisation will be unable to provide the same level of support to each household. Currently, Worthing Homes has 30 residents on Universal Credit, of which 66% are in rent arrears.  This is far higher than those who are not on Universal Credit.

Universal Credit is heavily reliant on the introduction and use of digital platforms for application for and assessment and management of the new system.  A huge number of Turning Tides clients and Worthing Homes residents will need extra support to navigate these effectively. Worthing Homes already runs computer classes and drop-ins where tenants can seek advice about budgeting and Turning Tides are holding the IT Junction sessions at St Clare’s and have computers accessible for clients during Hub sessions.

What is clear from talking to Worthing Homes is that the impact of the introduction of Universal Credit is unpredictable and there is a great deal of uncertainty around how this will affect their residents. Undoubtedly, there will be evictions and hardship ahead for many households in our community and both Turning Tides and Worthing Homes are very worried about the scale and impact for individuals and families.

The single payment system has also raised concerns around the potential for financial abuse in households. Universal Credit combines all benefits into one payment that is paid into one bank account. Gwendolyn Sterk, public affairs manager at Welsh Women's Aid said in a statement "We need a system that recognises a women's right to an independent income, rather than going back to the idea that one bread-winner would have that money paid into their account - and give them ultimate control over the whole finances of that household.”

Another key criticism of Universal Credit is the six week wait for customers before they receive their first payment. Citizens Advice have said that, over one third of the individuals they have helped, had to wait over six weeks for their first payment and half had to borrow money to make ends meet. Turning Tides’s Financial Inclusion Lead explained that those on the current benefits system will be informed that their benefits have ended and they will need to apply for Universal Credit. Commonly, and understandably, people are intimidated by new systems, particularly one as complex and radical as this.  Most will wait a week or two before actually applying. Their application then has to be processed. It takes a further six weeks for the first payment to be agreed and a few days more for it to appear in a nominated bank account.  By this time, it is easy to see how customers can be waiting 8, 9 or even 10 weeks without any money coming in.

Although payments in advance can be made, they are not widely advertised, encouraged or easy to get a hold of and are, in any case, then taken out of the first payment. This often means that rather than relieving individuals of debt it simply delays it. People have to borrow money from friends, family and loan companies with high interest rates, to meet their basic needs.

This wait can put households under considerable stress - physically, psychologically and emotionally. Not only are we seeing people struggling to meet their basic needs, but also this can cause substantial physiological stress. In areas of full Universal Credit rollout, food bank referral rates were running at more than double the national average. Charities and local authorities are worried that the six-week wait will have an impact on mental health. Many are calling for the immediate end to the six week wait. David McAuley, Chief Executive of the Trussell Trust said: “The move to simplify an often complex welfare system is a welcome one, but any large reform can have unforeseen consequences. Food banks see first-hand how changes to the welfare system affect people on the ground, and so can offer an early warning to decision-makers.”

Concerns about the implementation of Universal Credit have been raised nationally, but also by some of our own clients. Citizens Advice are saying that nearly a third of customers had to make ten or more calls to the helpline to get their claim sorted. Anecdotal evidence from one of our clients showed that those working in the Job Centre and on Helplines did not fully understand the process and relied heavily on a script. Where staff were not able to help, they were passed from department to department, often being given conflicting information. We are of course relieved that the Government has decided to drop the 55p per minute charge to the Helpline, however there are still widespread concerns that not enough has been invested in the roll out of the system and customers will find it difficult to be supported with their applications.

For Turning Tides services, the introduction of Universal Credit is causing great concern as we work hard to make sure our clients are ready for the change and that our staff are trained in how to support them most effectively. Our primary concerns between now and July are to make sure all our clients:

  • have acceptable, valid ID that will enable them to make their Universal Credit claim. Many of our clients do not have driving licences or passports. Even if they are already receiving benefits, they must apply for Universal Credit from scratch, which means that ID must be presented and verified again, even if it has historically been shown.
  • are IT literate. All Universal Credit applications and communications will need to be done online. Many of our clients do not know how to use a computer or have very limited understanding and access to them
  • have the relevant literacy skills. A small proportion of our clients have either no or low literacy and numeracy skills.  We will need to work closely with them to ensure that they complete applications accurately.
  • have an email address. All customers of Universal Credit will be required to have an email address. As part of IT literacy training we will be helping clients to set up email addresses.
  • have a bank or credit union account. Many of our clients have Post Office accounts and have their benefits paid directly there. The new system does not allow for Post Office accounts.

Turning Tides welcomes attempts to simplify the social welfare system and sincerely hopes that the scheme is successful. However, the roll out of Universal Credit appears to offer little or no provision to protect the most vulnerable and excluded in our communities.  We would like to see greater consultation with those who are most directly and profoundly impacted by the changes and the people who work to support them.

Talk to us! More importantly, talk to our clients.