Universal Credit expansion is ‘a disaster waiting to happen’ says Citizens Advice.
Citizens Advice is warning that the expansion of Universal Credit is ‘a disaster waiting to happen’, as as new findings show it is pushing people further into debt.
The charity says that the government’s plans to accelerate roll-out of the benefit from five to 50 areas a month from October could have catastrophic consequences, as there are still many problems with the system including the long wait for first payment. These challenges, and the resulting pressure on public services, also undermine the good intentions behind Universal Credit and risk preventing it from living up to promise.
For a new report out today (Monday 11 September 2017) Citizens Advice analysed over 50,000 cases where it has helped people with their debt problems and found that for those on Universal Credit:
79% have priority debts such a rent or council tax, putting them at greater risk of eviction, visits from bailiffs, being cut off from energy supplies and even prison – compared to (69%) on legacy benefits such as Jobseekers Allowance or Housing Benefit.
2 in 5 (41%) have no money available to pay creditors as their monthly spend on essential living costs is more than their income.
Typically people on Universal Credit only have around £3 a month left to pay creditors.
Citizens Advice is today urging the government to ensure no one applying for Universal Credit waits longer than 6 weeks for an income, and that anyone who needs it gets a payment within 2 weeks that they do not need to repay.
The charity is also renewing its call for the roll-out of Universal Credit to be paused until problems with the benefit are fixed and for the government to ensure support is in place to help people adapt as they move onto the new benefit.
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”
In “Universal credit and debt” Citizens Advice also explores other reasons why people on the new benefit are facing more money problems, 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.
The report follows research the charity released in July where revealing over a third (39%) of people turning to it for help with Universal Credit are waiting more than the 6 weeks it should take to receive their first payment, with just over 1 in 10 (11%) waiting over 10 weeks.
Over half (57%) said they have to borrow money while waiting for their first payment and while a quarter (27%) were able to get an Advance Payment to help tide them over 2 in 5 (40%) said they were not aware this help was available.
Universal Credit merges six existing benefits into one – including tax credits, housing benefit and Employment and Support Allowance (ESA). By 2022 over 7 million households will receive Universal Credit and new Citizens Advice analysis reveals over half (54%) of these will be working households.
Universal Credit fact sheet
Universal Credit was introduced in 2013, aiming to simplify the benefits system, to make transitions into work easier, and make every hour of work pay. It’s there for people on low incomes or not in work to help them meet their living costs.
Universal Credit is for people both in work and out of work, disabled people and those with a health condition, single people and those with families, people who own their homes and people who rent.
It replaces six means-tested benefits and tax credits with one benefit. This is paid in arrears, as a single household payment, on a monthly basis.
It is designed to use Real Time Information from HMRC to respond to changes in income, gradually reducing the UC payment as earnings increase to ensure work pays. The six benefits it replaces are:
Income-based Jobseeker’s Allowance (JSA)
Income-based Employment Support Allowance (ESA)
Housing benefit (HB)
Income Support (IS)
Child Tax Credits (CTC)
Working Tax Credits (WTC)
Universal Credit is being rolled out gradually across the country, one job centre at a time. Everywhere in the country either operates a “live service” or “full service”.
Live service areas are places where a limited version of Universal Credit is in place only for certain people (eg single adults not in work), so as to test the system on on those with simpler claims. ‘Full’ service has been developed to upgrade and build on the first, ‘live’ system.
From May 2016, full service Universal Credit began to be introduced across the country, in a small number of local authorities initially, which meant all new claimants of the six different benefits being replaced are required to apply for UC.
Live service roll-out is now complete, but full service roll-out is ongoing and due to accelerate significantly from October 2017. All areas will eventually become full service by 2022.
There are currently 570,000 people on Universal Credit in England and Wales, with around 50,000 new claims each month (ONS).
For more information contact: vicki.prout@citizensadvice.
Tel: 03000 231080
Out-of-hours contact number: 0845 099 0107
Notes to editors:
“Universal Credit and Debt” research based on Citizens Advice analysis of over 50,000 complex debt cases seen in the period October 2016 to June 2017, to establish what income clients received (including benefits) compared to the composition of their debt issues.
Survey of Citizens Advice clients asking for help with Universal Credit in full service areas running since August 2016 in 18 areas and as of May 2017 had a total sample of 792.
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