UNIVERSAL CREDIT (UC) is potentially May’s Poll Tax. It could be her Thatcher moment. This pernicious assault on the rights of UK citizens to welfare benefits has, during its pilot phases, caused huge poverty, rent arrears and hunger for claimants, their children and families.
The people affected have to rely on food banks and go into debt just to survive while waiting for their rightful benefit. This affects poor and disabled people who are being deliberately made vulnerable by this ideologically driven assault.
The groundswell of opposition is growing rapidly in the country at large and within Parliament. The cross-party Department of Work and Pensions (DWP) select committee has called for a halt to the rollout. The introduction of UC in North Kensington has been postponed. The potential for conflict, not seen since the Poll Tax and inner city uprisings, in the Grenfell area has caused a political retreat.
However at Tory Party conference the DWP Minister David Gauke confirmed that UC will continue to be rolled out without any pause or reform. Where does it come from?
In 2003, Iain Duncan Smith (IDS) said: "I want to be the party for the poor." He spoke at a 2005 Labour Party conference fringe meeting, saying Labour's definition of poverty was too limited: it is "not just about a lack of basics but a lack of sufficient resources to participate in the life of the community". After losing the party leadership he founded the Centre for Social Justice, which published reports on poverty and welfare reform.
However when he became Work and Pensions Secretary in 2010 he reverted to Tory type. He announced the plan for UC at the Conservative conference in the same year.
The philosophy that drives UC is to make work pay (to allow people to keep a bit more money if they do some work), and to make the benefits system mirror the world of work for most people - so you get one monthly payment, from which everything, including rent, has to be paid. That way you can easily move into work; you have already learned how to manage your money.
Every time someone has a change in income, UC can adjust the payments made within the next month – unlike the yearly assessments made with tax credits. It has been designed to be claimed and managed online, with all communication with a work coach taking place through an online journal and ‘to do’ list, which requires use of a PIN number.
The insistence on using a digital process is difficult in rural areas, and is a problem if you can’t afford phone credit, have no broadband or access to a computer, and have no money to travel anywhere. For disabled people who can’t learn how to use a computer or remember a PIN number, the process is even more of a barrier. The design looks good on paper for roughly 50-60% of claimants who can learn (with help) to budget their money, and will try to take on some work.
IDS’s grand idea was that people would keep 65% of all extra money they earned (65p in every pound), and the government would take 35% of it. This would have been a serious incentive for anyone on benefits to work, and would have lifted many people out of what was known as the ‘benefits trap’, where it was hard to leave the benefits system as it could leave you worse off. George Osborne insisted that these sums should be turned on their head, so it ended up that people only kept an extra 35p in every pound they earned, and the government took 65p. Last year they made a big fuss about increasing this, so that people now get to keep 37p, and the government only takes 63p. So yes, it does make work pay, but not by very much.
It’s not so good for the 30-40% of people who cannot manage the demands of the process, and can’t manage to budget their income over a monthly period. At the moment before UC is rolled out, they don’t always cope with fortnightly payments, but at least their rent is taken care of because it is paid direct to the landlord. UC replaces five means-tested benefits/tax credits for working age claimants, which was supposed to lead to a simpler system of benefit rules. But people’s lives don’t always fit easily within so-called simple rules. By far the biggest general complaints about UC are:
- the time it takes to make a claim (often due to problems in verifying the claimant’s identity, setting up a suitable bank account and providing evidence of housing costs, which have to be correct to the penny), and
- the long delays involved in getting benefit payments, at least six weeks even when everything works well.
Some of the loudest cries about delays have been from local authorities, housing associations and private landlords, who are finding that rent isn’t paid on time. Some housing associations have been issuing automatic notices to their tenants, telling them that if they become a UC claimant they must have two months’ credit on their rent account or they will face eviction proceedings.
The delays have also caused a big increase in claimant debt – some of which involves payday loans at extortionate rates of interest. More recently, food banks in rollout areas have reported they are struggling to meet demand since UC was introduced.
The all-party Work & Pensions Select Committee (W&PC) has been hearing evidence about all of the problems caused by UC since April 2017. It is now considering whether the rollout of UC should be halted because of the problems caused by delays in people getting their benefit payments, and the likelihood that this will be made worse if the DWP continues with the planned accelerated national rollout from November 2017.
On 15th September the DWP released UC statistics showing that 77% of people are getting their payments on time (i.e. after a wait of six weeks). Frank Field, chair of the W&PC, said: “77% on time may look good on an exam paper or from an office on Whitehall but even those payments mean a wait of six weeks for money for food and housing, and nearly one in four households are waiting even longer. Everything I have seen so far... points to fundamental flaws in the operation of UC which must be resolved before the full service rollout proceeds. As things stand, the government is on a Christmas collision course which will leave families destitute.”
At the Conservative Party conference, David Gauke said the UC rollout will continue as planned. He said: “people needed to be more aware that they could claim emergency advance payments instead of waiting for six weeks... almost half of all new claimants were now asking for payments in advance because they were unable to wait six weeks, up from just under 40% in April.”
There may have been an increase in uptake of advance payments (which are a loan against future benefit income), but they are the equivalent of 50% of what you expect to get in the future and have to be paid back over a six month period. If you have no money, and you are given only 50% of what the government says you need to survive for the month (which includes your rent), many people are forced into not paying their rent so that they can feed their family. It can cause serious problems with rent arrears and threats of homelessness. Repayment rates are considerable, causing extended periods of hardship. Disabled people face additional problems:
- They get paid less money than on previous benefits – the Enhanced and Severe Disability Premiums available to some people on Employment and Support Allowance have been removed.
- They have to jump through more unnecessary hoops - you can only get a disability addition to your UC payment if you go through a Work Capability Assessment, which assesses whether you are fit for work. If you have already been assessed for Personal Independence Payment, that doesn’t count. If you are also a carer, you cannot get both a carer addition and a disability addition – you can only get one of them.
In response to a torrent of complaints from advice services over the last few years, the DWP have tweaked around the edges, appointing people in Jobcentres to help vulnerable customers, but they expect the Third Sector to fulfil all the other support needs of claimants at a time of cuts in funding which have decimated services. Landlords have been told to make adjustments to allow for the delay in first rent payments.
Some local authorities are being creative: Norwich City Council is looking to see whether it can set up rent agreements that specify the date that a Direct Debt has to be made for UC, and will only classify someone as being in arrears if the DD bounces. This is the only way to start someone off on UC without automatic arrears on their rent account when they transfer from Housing Benefit to UC.
The local test areas of Great Yarmouth and Lowestoft have experienced substantial difficulties – one local organisation has reported a 70% increase of referrals being made to help avoid evictions. Front line staff in the Job centre are expected to learn on the job and don’t know answers to simple questions. A final nail in the coffin for anyone who misses an appointment or doesn’t do every task that their work coach has set them, is that they will be sanctioned – and potentially lose a large chunk of their money anyway.
So how can this be defeated? The government is weak. The labour and trade union movement must mobilise and make this May’s Poll Tax. UC can be defeated if a grassroots social movement can be created in opposition to this attack on the poorest and most vulnerable. The fact that the government has had to cancel implementation in the Grenfell area shows its weakness. The opportunity to defeat this is now, in the run up to Christmas, when thousands of families are going to be left without food and money.
It has to become a key part of Labour’s campaign to elect a Corbyn-led government for the many not the few. However, the people affected cannot wait another four years. A national campaign rolled out locally, mobilising the 600,000 party members, both old and new, can sweep away UC and this weak and wounded government in the process.