Under the legacy benefit system, if you are suddenly made unemployed you would probably go to the Jobcentre.
They would send you home to make a telephone call to arrange an appointment, you would complete a fifty page form, then provide various paper copies as evidence in order to collect around £70 a week. They may or may not tell you about housing benefit where you can go through the same process with your council to get your rent covered. If you move into part-time work the benefit system would take almost all of your earnings, leaving you maybe £15 a week better off for 15 hours a week. If you work enough hours you can make another claim, this time with HMRC, for tax credits.
I began working on welfare policy in 2007 after being unemployed. It was clear to me from being caught up in it that the benefit system is time-consuming, inefficient and too often favours inertia over initiative.
Compare that to a system with a single point of contact, where you receive a single payment, that feels supportive and generous when you take steps toward financial independence and that feels like a big leap forward. The rationale for Universal Credit becomes clear.
Universal Credit – the vision versus the reality
However, Universal Credit currently feels far from this promised land. For the 54% of claimants with the ability to make and manage a Universal Credit claim unassisted, it can feel like a better system. But one in six are not paid on time, 30% struggle with verification, and around half of people on Universal Credit say it is not easier to claim.
The DWP have made and will continue to improve Universal Credit, but some of the flaws go deeper.
The benefit system overall and Universal Credit itself is less generous than the system originally conceived
Universal Credit is being introduced in the context of over £12bn worth of savings to working age benefits, with more to come in the years ahead. This includes over £2bn worth of cuts to work incentives in Universal Credit which undermine one of its key pillars. The government cannot say they weren’t warned, they reversed similar cuts to tax credits after pressure from backbenchers. These cuts make Universal Credit less generous overthan the benefit system it replaces.
The benefit freeze in particular means that more and more people are struggling to make ends meet as rents and living costs continue to rise. In this context, people moving onto Universal Credit do not have the financial capacity to manage a change to their income, and this is getting harder each year.
Some changes such as limiting support to two children, or the ‘minimum income floor’ which makes the benefit system less generous for low earning self-employed people, are being brought in as part of Universal Credit. In reality, they are separate cuts which could be applied to the legacy system, but it was seen politically less painful to hide them within the government’s flagship reform.
The benefit cap, bedroom tax, localisation of council tax support are all salami-sliced cuts to the benefit system that act against the original aims to Universal Credit, making it less generous, adding complexity and taking focus and resources away from efforts that could otherwise be used to make Universal Credit work. The sheer number of changes and pressure to find savings are pushing the support network around the benefit system to its limits.
Universal Credit has too often added complexity for claimants and missed opportunities to take it away
The process to make a claim remains complicated. An online form followed by a call to make an appointment and multiple visits to the Jobcentre are all required before your claim is complete. Online verification works in only one-third of cases, and the need to produce paper copies continues.
The way Universal Credit is paid, as a single monthly payment to the household, is a big change from current benefits. While the intent is to ease the transition into work, it makes sense to leave defaults as they are, but give people choice over how frequently they are paid. People find it difficult to know how much support they will get because awards are calculated a week before payment, while benefit and budgeting tools that can help people to plan sit outside the Universal Credit claim journey.
The ability of DWP staff to explain the system and quickly resolve issues is inconsistent. This is partly because peoples lives, and therefore their benefit claims remain complex. But the support sector that has the expertise to help vulnerable claimants also finds it hard to engage with the system, and often have to explain the rules and guidance to the department.
The Department for Work and Pensions has made significant changes to Universal Credit to make it work, but we are told that they don’t have the resources to develop on all fronts simultaneously. The spending pressure the department is under means that it has too often focused on controlling administrative expense, over a customer focus, when the sheer scale of Universal Credit make this a false economy.
Build on solid foundations to make Universal Credit work
Despite the publicity, the fundamentals of Universal Credit are sound, and the foundations of a good benefit system are in place.
Problems with the implementation of tax credits and the localisation of housing benefit in the 1980s were resolved by spending money. Two weeks of the Universal Credit personal allowance, paid as a one-off on the day you move onto the new system, would ease the transition onto Universal Credit and help low income families who are already under pressure from existing cuts.
The government need to not only allow Universal Credit to become more generous, but also allow the department to invest in delivery. Transition to a new system was always going to be difficult. History tells us you can’t do welfare reform on the cheap.
The government appears to be listening
The news broke this morning that the government are considering changes to Universal Credit rollout. It’s good to see that they are considering one of our recommendations, a two week run on of JSA / ESA. As well as the three policy changes covered by the BBC and highlighted below, it would appear that large-scale movement won’t begin until November 2020 at the earliest.
— Michael Buchanan (@BBCMBuchanan) October 16, 2018
First off, plans have been drawn up to continue paying income support, employment and support allowance, and job seekers allowance for two weeks after a claim for universal credit has been made.
Second, there are to be changes to how deductions from a recipient’s payment can be made. Claimants can ask for an advance to help them get by while waiting for their first proper UC payment – later the government takes deductions from their regular monthly award to pay that back. Under the revised plans, the maximum amount that can be deducted will be reduced from 40% to 30% of their total award each month.
Thirdly, more help is set to be given to the self-employed, after warnings they could be left in serious financial trouble because of incorrect assumptions by the Department for Work and Pensions about their earnings.
This post based on an article originally written by Deven Ghelani for the New Statesman.