IT has become crystal clear that the Universal Credit system equals universal misery for the growing masses of the working poor in the UK.
As with Thatcher’s Poll Tax, this system is now hated, even in its infancy, as it is being ‘rolled out’. Its purpose has become clear – to punish the poor and discipline them into living as paupers, with just one benefit, and creating a situation of massive rent arrears and evictions, and a life dependency on food banks.
This is all that modern British capitalism has on offer – a return to Jack London’s ‘People of the Abyss’ in the early 20th century East End. However, the Labour Party is only seeking to ‘pause’ and not to abolish Universal Credit. It will not make its abolition an election manifesto policy.
Southwark and Croydon councils in south London have already issued a warning that without rapid changes, the new system will have a devastating effect across the country as it is ‘rolled out’ over the next few months, warning that arrears could reach ‘many hundreds of millions of pounds’ and that many tenants could face severe hardship and eviction.
The report issued by the two councils examines rent accounts for 775 social housing tenants in the two boroughs who had moved onto Universal Credit between August and October 2016, comparing them with 249 rent accounts held by tenants who moved onto the older Housing Benefit system during the same period.
What emerged was that 36% of those moving onto Universal Credit failed to pay rent at all in the first week, and on average accrued arrears for each of the next 11 weeks. At the end of the study period, 406 of the 775 households on Universal Credit were in a worse financial position than at the start. On average, each Universal Credit tenant ran up arrears at a rate of 60p a day. Total arrears for this group rose by £89,000 over the period.
For Southwark, although just 12% of its social housing tenants were on Universal Credit, they have collectively built up £5.8m in rent arrears. The average Universal Credit household was £1,178 in arrears, compared with £8 in credit for the average council rent account across the borough.
By week 20, tenants in receipt of Universal Credit were on average £156 in arrears, while those who were on Housing Benefit were in credit. Universal Credit tenants were far more likely than Housing Benefit claimants to fail to pay the full rent owed – more than a third underpaid rent by 75%.
It is no wonder that this situation causes extreme stress, anxiety and depression, and a situation where ‘Participants in this research almost universally have experienced financial hardship as a result of transitioning onto Universal Credit, notably as a result of the significant delays to payment,’ the study says.
Southwark’s Pecan food bank reported a 97% increase in referrals in the first three months of the year, and handed out 34% more food parcels over the same
Fiona Colley, Southwark’s cabinet member for finance, modernisation and performance, said: ‘I implore the government to listen to how this is affecting the poorest and most vulnerable people in our borough, and the potential effects reverberating nationally.
‘Universal Credit, in its current form, has the potential to be catastrophic, not just for residents at an individual level, but for councils’ budgets. The arbitrary delay in receipt of money – particularly for those already in difficult situations such as temporary accommodation, could mean a spiral of debt, poverty and people not being able to afford to eat. I cannot think of a more compelling reason to push for change on this.’
Alison Butler, Croydon Council’s deputy leader and cabinet member for homes, regeneration and planning, said: ‘This report underlines the major flaws in Universal Credit, which is placing more and more Croydon and Southwark families in rent arrears and at risk of losing their home.’
The working class did not put up with the Poll Tax under Thatcher – it took mass actions and brought her down. The trade unions and the Labour Party must demand the abolition of Universal Credit and call mass actions to bring down the Tories and bring in a Workers Government that will carry out socialist policies and put an end to UK capitalism.