Our latest briefing on Universal Credit sets out the problems with the design, which turn it from a poverty reducing measure to a poverty increasing measure.
This briefing was last updated in April 2019.
Read the summary below or download the briefing in full.
Summary
The design of Universal Credit (UC) does not reflect the realities of those who must rely on it. The design assumes substantial savings, IT access and literacy as well as monthly salaries. While these are the norm for many members of society, including those who designed UC, they are not the experience of many people who will have no choice but to rely on UC.
As Universal Credit is a single payment combining a number of benefits, the accuracy and timeliness of payments is even more crucial than for the legacy benefits. UC delivery continues to be less accurate than legacy benefits and the complexity of the benefit makes improvements difficult.The design of Universal Credit (UC) does not reflect the realities of those who must rely on it. The design assumes substantial savings, IT access and literacy as well as monthly salaries. While these are the norm for many members of society, including those who designed UC, they are not the experience of many people who will have no choice but to rely on UC.
The monetary value of Universal Credit continues to be significantly eroded. The benefit freeze, cuts to work allowances, cuts to the underlying tax credit rates and a number of other detailed changes have transformed UC from a poverty reducing measure to a poverty increasing measure.
The design of Universal Credit leaves families who do not have substantial savings with no choice but to go into substantial debt if they wish to pay their rent and feed their children. The choice to create an inflexible monthly cycle necessitates a substantial wait for the first Universal Credit payment. A government which views debt in low income families as a key “pathway to poverty” has chosen to solve this design problem by offering large loans. Repayments of these loans will make a substantial impact family’s ability to make ends meet for at least a year.
Universal Credit is designed around claimants having good IT skills and ongoing internet access yet this is not true for considerable numbers of people, especially poorer and disabled people.
Self-employed people often do not have the regular monthly income that UC is designed around. While in good months when income is high the UC payment is reduced as normal, in low income months a “minimum income floor” applies preventing UC from increasing to compensate as it would for employees.
Early data on Universal Credit trials and job outcomes was based only on single people without children who were fit and ready for work. Whilst the data for these easiest of cases is positive it tells us nothing about how UC affects the more complex cases of those with children, those unfit for work, or those in work but with a low income who will form the vast majority of claimants.
Latest statistics indicate that depending on your age you are 58% – 122% more likely to be sanctioned if you are receiving Universal Credit than if you are on a legacy benefit (the benefits that UC is replacing). UC will approximately double the number of people who may be sanctioned including people who are working but on low incomes.
As Churches we are concerned that the design of Universal Credit does not sufficiently take into account the lives, skills and resources of the least well off, and as a result will lead to greater debt, poverty and exclusion. We believe it should be paused until these design and implementation flaws are rectified.
