Universal Credit is failing millions of people, particularly the most vulnerable, according to an influential group of peers.
A new report by the House of Lords’ economic affairs committee says the design of the controversial welfare scheme has led to soaring rent arrears and the use of food banks.
It argues the five-week wait for the first Universal Credit payment is the main cause of insecurity.
According to the report, this wait entrenches debt, increases extreme poverty and harms vulnerable groups disproportionately.
The peers say ministers should introduce a non-repayable two-week grant to all claimants.
The way that payments are calculated can result in large fluctuations in income month-to-month, making it extremely difficult for claimants to budget. The level of awards should be fixed at the same level for three months.
There should be a mechanism to enable claimants to have an early reassessment if their circumstances change.
It adds including childcare support in Universal Credit was a mistake.
Paying costs in arrears has been a barrier to in-work progression and in some cases, it has been a disincentive to work.
The report says the government should remove childcare support from Universal Credit and be made into a new standalone benefit paid in advance.
‘Most people, including our committee, broadly agree with the original aims and objectives of Universal Credit,’ said committee chair, Lord Forsyth of Drumlean.
‘However, in its current form it fails to provide a dependable safety net. It has led to an unprecedented number of people relying on foodbanks and not being able to pay their rent.
‘The mechanics of Universal Credit do not reflect the reality of people’s lives. It is designed around an idealised claimant and rigid, inflexible features of the system are harming a range of claimant groups, including women, disabled people and the vulnerable,’ added the chair.
‘Universal Credit needs more money to catch up after 10 years of cuts to the social security budget. It requires substantial reform to its design and implementation, the adequacy of its awards, and how it supports claimants to navigate the system and find work.
‘The five-week wait for a first payment must be replaced by a non-repayable two-week grant to all claimants. The monthly payment calculations which can result in big fluctuations to claimants’ incomes should be fixed for three months. Historical tax credit debt needs to be written off.’
‘The punitive nature of Universal Credit has not worked. It punishes the poorest by taking away their sole source of income for minor infractions. It needs rebalancing, with more carrot and less stick, particularly as large numbers of claimants will have ended up on it because of events completely out of their control.’
In response, the minister for welfare delivery, Will Quince said: ‘The case for Universal Credit has never been stronger. The system defied its critics in unprecedented and unforeseeable circumstances, processing more than 3.2m new claims at pace since mid-March and paying more than a million advances worth hundreds of millions of pounds to those in urgent need within days.
‘We remain committed to supporting the most vulnerable in society, which is why we currently spend over £95bn a year on the benefits system. We’ve also increased the Universal Credit standard allowance by up to £1,040 a year, as part of a package of welfare measures worth over £9.3bn.’
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