MPs launch official inquiry into universal credit as criticism grows

Investigation into benefits system comes amid mounting evidence that payment delays have left thousands facing eviction.


Powered by Guardian.co.ukThis article titled “MPs launch official inquiry into universal credit as criticism grows” was written by Patrick Butler Social policy editor, for theguardian.com on Wednesday 22nd February 2017 13.38 UTC

MPs have launched an official inquiry into universal credit amid growing concerns that design flaws in the new benefits system are leaving thousands of low-income claimants facing eviction and reliant on food banks.

The Commons work and pensions committee said it was compelled to launch a full investigation after mounting evidence that built-in payment delays and administrative blockages were creating severe problems for claimants and landlords.

A Guardian investigation this month found widespread evidence that thousands of tenants on universal credit were running up rent arrears and debts because they could not manage the minimum 42-day wait for a first payment.

Landlords have also criticised the system, with private landlords warning that they will not let to universal credit claimants because of the high risk of rent arrears and problems navigating byzantine official bureaucracy.

Surveys by housing associations have found that up to nine in 10 tenants on universal credit either run up rent arrears or increase the level of pre-existing arrears because so few are equipped to cope with long waits without income.

Frank Field MP, chair of the work and pensions committee said: “Huge delays in people receiving payments from universal credit have resulted in claimants falling into debt and rent arrears, caused health problems and led to many having to rely on food banks.”

The inquiry will ratchet up the pressure on the Department for Work and Pensions to review the design of universal credit. It has played down the impact of the 42-day waiting time, arguing that its research carried out two years ago suggests arrears levels fall after three months once tenants get used to the new system.

But the former welfare minister Lord Freud admitted to MPs last month that at least a quarter of tenants on universal credit had run up rent arrears as a result, and he suggested that ministers should consider shortening waiting times for payment.

The MPs inquiry was announced on the same day that the universal credit full service was rolled out to a handful of new areas, including Poplar in east London and Warrington. The rollout is not due to be complete until September 2018.

The inquiry will examine the impact of the 42-day wait for payment – in some reported cases the wait has been up to 60 days when administrative delays are factored in – on tenants and landlords. It will also consider whether more support should be built into the system for low-income and vulnerable claimants.

Field said: “It is bad enough that UC has a built-in six-week wait between someone applying and receiving their first payment, but we have heard that many have to wait much longer than this.

“The adverse impact on claimants, local authorities, landlords and charities is entirely disproportionate to the small numbers currently claiming UC, yet Lord Freud has told us he thinks it will take decades to optimise the system.

“We have therefore felt compelled to investigate UC yet again. We will examine what its impact is on claimants and those local bodies which deal with them, and what government needs to do to ease the pressure on those worst affected.”

The wait for a first universal credit payment comprises an initial period of seven days, during which claimants cannot make a claim, followed by an assessment period of one month.

The 42-day wait is based on the idea that newly unemployed claimants will have a month’s final salary to tide them over, but many are accustomed to being paid weekly or fortnightly. Many have no savings.

Universal credit was introduced by the former work and pensions secretary, Iain Duncan Smith, in 2013 to ensure claimants would be better off in work than on benefits. However, Treasury cuts to universal credit work allowances have reduced the incentive for some claimants to get a job and will leave 1.2 million working families worse off.

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