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Universal Credit Report

The Work and Pensions Select Committee has published its third report into Universal Credit implementation: meeting the needs of vulnerable claimants.

Universal Credit will replace six separate benefits (Income-based Jobseekers Allowance (JSA), Income-based Employment and Support Allowance (ESA); Income Support; Child Tax Credits; Working Tax Credits; and Housing Benefit) with one new single benefit. Other changes that the Government is planning include greater digital inclusion, financial inclusion and personal responsibility among benefit claimants. These changes will mean that, once someone is transferred to (or makes a new claim for) Universal Credit, they will:

  • be required to move to online claiming;
  • receive a single monthly payment for the household;
  • receive housing costs in the single payment rather than being paid direct to landlords.

While the Committee welcomes the philosophy for introducing Universal Credit, it raises a range of concerns mostly regarding how the most vulnerable claimants will be affected. In general, Ministers argue that the system has been designed for the majority of people, and that now the needs of the minority can be addressed. Unfortunately this could lead to a lot of afterthoughts tagged on to the system rather than being a fundamental part of it. From our reading of the report, many of the suggested elements to support the most vulnerable are temporary and we get the feeling that the minority are going to have to fall in line with the majority, whatever impact it has on them.  

People with mental health problems, learning disabilities, housebound people with physical disabilities, those with cultural and age barriers to change, and difficulties in providing the required documentation and information were among those highlighted as being at risk from these plans.  Among the most criticised aspects of Universal Credit are:

  • the digital by default approach to claiming which will see the only route to the benefit being online.  Even DWP's own helpline will be designed to talk people through the online application rather than taking a claim over the phone.  If people don't have personal internet access they are going to be expected to seek out the internet at libraries and Jobcentres.  DWP are already starting to introduce terminals in Jobcentres, and recognise that they will need staff to support people in making their claim.  
  • the move to monthly payments which the Government profess is how the world works.  They've been given plenty of evidence that it doesn't but Lord Freud has decided that the vast majority want to go monthly (based on what evidence we have no idea) and all other evidence is secondary. DWP's concession is to advance a claimant two weeks of the first monthly payment when they start Universal Credit to tide them over.  This has to be paid back over 12 months.  Their concession to continuing fortnightly payments to some individuals is to make them wait 5 weeks to receive 50 percent of a single monthly payment and then give them the next 50 pecent two weeks later.  We kid you not – how that helps someone stay out of debt and manage their finances we have no idea!  
  • a single payment to the household is deemed by the Government to be the way household finances should work.  While commentators recognise the need to calculate the benefit based on the circumstances of the household, there is plenty of opposition to forcing the household to nominate one individual to receive the money.  The Committee is calling for the payment arrangements to not automatically default to one individual.
  • direct payment of housing costs.  Rather than housing benefit being paid directly to landlords as is currently the case, the payment will be made to the household who will then need to organise payment to be forwarded to the landlord.  While this is clearly more cost effective for the government, the temptation to use the housing benefit for other emergencies, debts or purchases, is obviously there.  Some people will be able to manage this effectively, but others will have greater difficulty.  Problems caused by this may only impact a small proportion of claimants, but the impact on them will be major.  The Committee is calling for any existing claimant who has their housing benefit paid to their landlord, to have the option to continue this arrangement. 

Monthly assessment seems to have been somewhat overlooked by the mainstream media.  Under Universal Credit, household benefits will be calculated a month in arrears.  If there is any change of circumstances within the month, the benefit will be calculated as though the change occured at the start.  Therefore, if entitlement to benefit ceased at any point in the month, then the entire month's benefit will be lost.  This is apparently being done for simplicity sake, and there will be winners and losers, but for those who could end up on the losing end this is a major issue.  For example, a household entitled to £1,500 for the month, have a change of circumstances on the 29th day that means they no longer qualify for benefits.  They do not receive the £1,400 that they could have expected up to that point in the month.  The government maintains that Universal Credit reflects the world of work - we would like to point out that if someone changed jobs on the 29th of a month, the employer would have a legal obligation to pay them for the period they worked, so how on earth this aspect of the new system can be justified on any level is totally beyond comprehension.

There is also a real focus on the support for disabled adults and children which is being discussed across the media and interested organisations.  While the Government has stated its intention that Universal Credit will provide more generous support for disabled people than for non-disabled people, the Committee has not yet received sufficient evidence that the current plan for additional disability elements ensures this is the case.  Read the report for more detail on this subject.

As Universal Credit is piloted in early 2013 more insight is expected into how the benefit will impact on individuals. 

Visit the parliament website to read the full conclusions of the Committee and download the full report.

22 November 2012

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