Universal credit ‘ticking time bomb’

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Workers demanding an end to benefit cuts – The government’s Universal Credit means millions of people receiving less money
Workers demanding an end to benefit cuts – The government’s Universal Credit means millions of people receiving less money

UNIVERSAL Credit is a ‘ticking time bomb’ for many low-paid working families, shop workers union Usdaw warned.

Last Tuesday, the full roll-out of Universal Credit began. Universal Credit is now being pushed at every job centre in the UK for all single people. Universal Credit rolls six benefits into one: Jobseeker’s Allowance, Housing Benefit, Working Tax Credit, Child Tax Credit, Employment and Support Allowance and Income Support.

All six will be paid into the claimant’s bank account as a single monthly payment. It is then up to the claimant to decide whether to eat, heat or pay rent because there will not be enough money to do all three.

Tory MP Iain Duncan Smith, who introduced Universal Credit during his time as work and pensions secretary, resigned from the position in March after saying he could not support changes to benefits that ‘penalised the poor and vulnerable’. He added: ‘The government’s austerity programme is in danger of drifting in a direction that divides society rather than unites it.’

Shop workers’ trade union leader John Hannett, Usdaw General Secretary said: ‘The Government has allowed severe cost cutting to turn the initial intentions of Universal Credit to simplify benefits and improve incentives to work, into a real threat to the incomes of low-paid working families.

‘We were delighted to have won the argument on tax credit cuts, having forced the government into a U-turn, but Universal Credit is a ticking time bomb that will leave many working families much worse off when they are transferred onto it.’

Analysis from the Resolution Foundation shows that around 2.5 million working households will be worse off by an average of £41 a week, while around 2 million households will be better off by an average of £34 a week. Further analysis by Liverpool Economics shows that from April cuts to the work allowance will also mean that disabled people who are working will have their support cut by £2,000 a year.

Usdaw’s own analysis reveals that a parent couple, both working in retail, earning just above the so-called National Living Wage, one working full-time and one part-time, would be £1,866 worse off on Universal Credit. The Resolution Foundation has also warned that the computer system to implement Universal Credit is destined for a meltdown.

There are ‘serious design flaws’ that are ‘veering off track’ the Resolution Foundation stressed. The Resolution Foundation explains that the computer system underpinning Universal Credit will crash as the programme takes on more and more complex claimant cases.

The report, ‘Making a success of Universal Credit’, noted that from last Tuesday, Universal Credit looks very different from its original inception. ‘The latest series of cuts – announced at last year’s Summer Budget – risk leaving Universal Credit as little more than a vehicle for rationalising benefit administration and cutting costs to the exchequer,’ said the report.

The Major Projects Authority stepped in to reset the programme after finding ‘serious concerns about the department having no detailed “blueprint” and transition plan’.

The original IT programme had to be abandoned and £40.1 million pounds written off – a costly disaster.

Since then the programme has taken a ‘twin track’ approach, using the old IT from the original project while developing a digital front end. The report said the system is ‘not just a new IT system being put into place’. It said: ‘UC brings with it a new, untried and untested system.’

Public services trade union, Unison has produced a list of 10 things the government will not tell you about Universal Credit. Unison said: ‘The government conveniently forget to mention the cuts that have taken place before Universal Credit started – cuts to housing benefit, the bedroom tax, cuts to working tax credit and child tax credit, disability benefits such as Disability Living Allowance and the replacement of council tax benefit with local schemes that often involve people losing £200 a year.

‘The introduction of Universal Credit is accompanied by the abolition of the severe disability premium – worth £59.50 a week,’ Unison adds. Listing ten problems with Universal Credit, Unison said:

‘1. Once a claimant is in receipt of Universal Credit they will remain on Universal Credit even if their circumstances change, for instance if they gain a partner or children.

‘2. Millions of people have never used the internet but applications can only be made “online”.

‘3. Low income households will be worse off.

‘4. People who are “under employed” will lose out.

‘The reforms are bad for low earners with a working partner who is in work and looking to work more, especially those who previously received Working Tax Credits.

‘They will see more of their extra earnings clawed back by reducing their Universal Credit.

‘5. People could be driven to using payday lenders (or worse still loan sharks) because they will usually get nothing for the first five weeks.

‘Unlike current benefits, Universal Credit is paid monthly in arrears.

‘6. Universal Credit is calculated on the basis of the household’s situation on the day of the assessment and the next calculation is done on the same day the following month. Calculating Universal Credit this way means that changing circumstances may not be taken into account.

‘For example a woman may be pregnant and the child may be born the day after the day of the assessment.

‘The Universal Credit calculation will not take account of the fact that there is a new child until the next assessment date.

‘7. Universal Credit is a monthly payment paid in arrears and there is no entitlement for under a month.

‘People do not realise when they come off Universal Credit they will not get a payment for the uncompleted month and that includes the housing element.

‘8. Monthly payments will make it harder for people to budget, rather than getting your money every two weeks.

‘9. People will not have the choice to be paid fortnightly.

‘10. Claimants could pay “a fortune” in telephone costs.

‘Making Universal Credit applications online-only when over four million people do not have access to a computer or cannot use one, only means that when people have problems they will rely on help via the telephone. The Universal Credit helpline is an 0845 number (0845 600 0723) costing up to 10p a minute from a landline and 41p a minute from a mobile.’