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Universal Credit roll-out is ‘a disaster waiting to happen’, says Citizens Advice

Tory plans to accelerate the roll-out of Universal Credit are likely to push more low-income households into debt and leave them at greater risk of homelessness.

Government plans to accelerate the roll-out of Universal Credit (UC) is “a disaster waiting to happen”, says Citizens Advice, as a new report reveals it is likely to push more low-income households into debt and leave them at greater risk of eviction.

The charity says that Tory plans to accelerate roll-out of the new benefit, which merges a number of existing social security benefits and tax credits into one single monthly payment, from five to 50 areas a month from October could have “catastrophic consequences” for households affected.

In their new report, ‘Universal credit and debt’, Citizens Advice analysed over 50,000 cases where it has helped people with their debt problems and found that 79% of UC claimants have priority debts such as rent and council tax arrears, compared to 69% of those on benefits that are set to be replaced by UC.

The research found that 2 in 5 (41%) have no money available to pay creditors as their monthly spend on essential living costs is more than their income. Overall, UC claimants typically only have around £3 a month left after living costs to pay creditors, says Citizens Advice.

More than a third (39%) of people turning to Citizens Advice for help with Universal Credit are waiting over 6 weeks to receive their first payment, while 11% are waiting over 10 weeks.

Related: David Gauke signals he will press on with universal credit

The delay in receiving their first payment is forcing people to borrow money to make ends meet (57%), with only a quarter (27%) being able to get an ‘Advance Payment’ on their benefits – 40% were unaware that this help was even available.

The report also uncovered other issues with UC that are causing money problems for claimants, including:

  • Poor administration and errors by the Jobcentre or Universal Credit team.
  • Problems with budgeting, particularly when people’s income fluctuates due to insecure work.
  • Difficulties opening a bank, building society or credit union account, which is needed to receive Universal Credit.
  • Money being taken from regular Universal Credit payments for other debts, such as rent arrears or tax credit overpayments.

Citizens Advice is calling on the UK Government to pause the roll-out of UC until problems with the flagship benefit are resolved.

Related: Almost 90% of Universal Credit tenants are in rent arrears, warns Council

The charity also says the minimum six week wait before UC claimants receive their first payment should be scrapped.

Citizens Advice Chief Executive, Gillian Guy, said: “The roll-out of Universal Credit is a disaster waiting to happen.

“While the principles behind Universal Credit are sound, our evidence shows that if the government continues to take this stubborn approach to the expansion of Universal Credit, it risks pushing thousands of families into a spiral of debt, and placing an even greater strain on public services.

“People face severe consequences – like visits from bailiffs and eviction – when they can’t pay their bills. But government can help protect these households by taking the simple step of pausing Universal Credit and fixing the underlying problems, so families are less likely to fall into arrears.

“The government should also ensure that everyone has access to the support they need to adapt to Universal Credit”.

Related: Universal Credit will leave single parents up to £3,100 a year worse off, say Labour

A Department for Work and Pensions spokesperson said: “We are committed to helping people improve their lives and raise their incomes.

“Universal Credit does that by providing additional, tailored support not available under the old benefit system, including more help for those in work so they can eventually stop claiming benefits altogether, and under UC people are moving into work faster and staying in work longer than under the previous system.

“The vast majority of claimants are comfortable managing their money, and for anyone who needs extra help, we have budgeting advice and benefit advances.”

Last updated: 17:29 (GMT) on 11th September 2017.

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  • robinbaldock

    The principles behind universal credit are not sound: even the name contains its inherent contradictions its is not universal and it causes debt.

    The tories have designed a system which does the opposite of what it says on the tin. They are masters at this. It does not help peoples in the work except in the sense that if they do not find enough work to get off UC, the decoupling of LHA from actual market rents, the gap in receiving any benefit even if it is done properly according to the rules, the system of sanctions and endless and impossible hoop jumping required to avoid them, the inclusion of housing benefit into the sanctions, all of these elements built deliberately into the system, they will become homeless.