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Universal Credit is driving workers into poverty - stop and scrap it now

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Published date
12 Oct 2018
The government's flagship benefits policy is pushing low-paid workers into debt. It must be scrapped before any more damage is done.
Image of Iain Duncan Smith and Esther McVey
The brainchlid of former Work and Pensions Secretary Iain Duncan Smith, Universal Credit is now being handled by his successor Esther McVey (Credit: Chris McAndrew)

It’s been a torrid few weeks for Universal Credit (UC), the government’s flagship new benefits scheme.

The brainchild of former Work and Pensions Secretary Iain Duncan Smith, UC is one of the biggest reforms to the social security system for decades.

Eventually, around seven million people are set to be on the new benefit – including half of all families with children.

It was supposed to simplify social security by bringing most means-tested benefits and tax credits into one payment.

But in the areas where it’s been rolled out already, it’s been plagued by problems that are pushing more people into poverty.

That’s why we’re calling for the rollout to be halted now.

And for UC to be stopped and scrapped before it does any more damage to some of the lowest paid workers in the country.

Trials and errors

So far UC has only been rolled out in trial areas for new claimants or those whose circumstances have changed.

But the results haven’t been pretty.

In areas where Universal Credit has been rolled out, there are more people turning to foodbanks, falling into rent arrears, and getting into problem debt.

Despite these issues, the government is planning to plough on with the transfer of around 3 million existing benefit claimants onto UC from January 2019.

But the so-called ‘managed migration’ process is full of problems.

A disaster waiting to happen

Transferring from an old benefit onto UC is not automatic, so all the responsibility is on the claimant.

Applying to get on to UC is complex, so many claimants will face huge problems in getting it right.

And there’s a big risk that their existing benefits will be stopped before they’ve transferred to the new system.

We are also concerned that existing claimants will have to wait a minimum of five weeks for their first UC payment – just like new claimants.

With a fifth of adults in the UK having less than £100 in savings, many claimants won’t have enough money to get through this five-week period.

And then there’s the fact that many claimants will miss out on so-called ‘transitional protection’, which is meant to stop them being worse off.

Anyone who makes a mistake in the complex process of applying for the new benefit will be denied this protection.

So instead of providing a safety net for people on low incomes, UC will drive more into problem debt.

“Immense suffering”

Given the problems with UC so far, it’s no surprise that so many are calling for it to be stopped and scrapped.

At our annual Congress last month, the Archbishop of Canterbury Justin Welby called for the rollout to be stopped until the government could find a way to end the “immense suffering” it was causing.

Last weekend, Shadow Chancellor John McDonnell confirmed that a future Labour government would scrap UC because it was “not sustainable”.

Then former Labour Prime Minister Gordon Brown called on the government to abandon the full national rollout, warning of chaos after the full rollout next year.

And just yesterday the former Conservative PM John Major warned that UC could do as much damage to the Tories as the poll tax did in the late 1980s.

Benefit services “not ready”

Today the union that represents the staff in charge of administering UC has added its voice to the chorus.

PCS – the civil servants’ union – says job centres are already drowning in a backlog of UC claims, and that there are simply not enough staff to meet demand.

This is leading to delays in claimants receiving their entitlements, as well as a huge volume of calls to the UC hotline.

Stress levels among staff – who are doing their best to make the best of a bad situation – are rising by the day.

And the full rollout of UC will dramatically increase their workloads without a massive increase in recruitment and significant investment in training and infrastructure.

That’s why the government needs to stop the full rollout before it’s too late – and the Department for Work and Pensions needs to engage in meaningful dialogue with the PCS to address staff concerns.

Not fit for purpose

UC has been a complete disaster for low-income workers already – and it’s only going to get worse.

Ministers should listen to the calls from all sides of the political divide and scrap it today.