On 4 April, the Department for Work and Pensions (DWP) published an important report about Universal Credit. However, this report is dated November 2017. It shows that Universal Credit causes “financial difficulties”. Yet the DWP took a year and a half to publish this evidence.
New systems
The report is called The transition from tax credits to Universal Credit: qualitative and quantitative research with claimants. Universal Credit is the DWP’s flagship welfare payment. It combines six old means-tested benefits, including tax credits. From the outset, it’s been dogged by controversy. From a damning National Audit Office report to its links with increased foodbank use and rent arrears, the benefit has caused difficulty for millions of people.
The old benefits system included working tax credits and child tax credits. It was a lifeline for millions of working people and families. But under Universal Credit, these will be phased out. As the report notes, the move to Universal Credit “is happening in two ‘waves’”. So-called “natural migration” is underway. From 2019, “managed migration” means that all claimants move onto Universal Credit. HMRC and the DWP commissioned this research:
to evaluate the experiences of claimants as they stop receiving tax credits and apply for Universal Credit during natural migration in order to understand and improve on their experience.
The research highlights clear issues. Not least because both benefits use different calculations, so many people received tax credit overpayments. This means that not only did some people have to wait “three months or more” for Universal Credit payments, but one person reported owing HMRC money due to overpayments. This caused “considerable stress”. Some people turned to loan sharks, others fell behind with rent.
Over the next three years, managed migration means “hundreds of thousands” of people claiming tax credits must shift to Universal Credit. Yet the DWP took a year and a half to publish these results that highlight serious issues with this move.
“Financial difficulties”
People responding to this research were among the first to move from tax credits to Universal Credit. The fieldwork took place between 2016 and 2017. Footnotes in the report do show that some action had been taken to help the process in certain areas. But in other aspects, serious issues emerged. For example, the research showed that:
- Over a third (38%) of those surveyed had “financial difficulties”. Of that group, “around six in ten” people (62%) said that these problems “started in the same month or after” making Universal Credit claims.
- Overall, 42% were “dissatisfied”. Of that group, 29% were “very dissatisfied”. This is almost double the number of people (15%) who claimed to be “very satisfied”.
- The report also revealed that people with pre-existing health conditions were the group least likely to be satisfied (36%).
- One telling part of the report states that people “with health conditions, not working, with limited IT skills, those with a first language other than English, single claimants or private renters… experienced greater difficulties with the transition”.
- It’s also significant that 93% of those surveyed have children.
The Canary contacted the DWP for comment about the delay in publishing this report and some of its key findings. It gave no reply. According to the Guardian:
The DWP referred an approach for comment to HMRC, which cited improvements to universal credit. A statement said: “Since January 2018, customers can get an advance of up to 100% of their estimated monthly UC entitlement while they wait for their first payment.”
“A political choice”
Testimonies in the report highlight the impact on real lives. One person said:
I panicked…£150 doesn’t go far over five weeks… because I didn’t know I was going to have to wait that long. (Lone parent, working)
Another stated:
They didn’t tell us the tax credit payment would stop, there was just no money in the bank. HMRC said it’s Universal Credit’s problem, then at Universal Credit one person says one thing and someone else says something else. (Couple with children, unemployed)
As The Canary has documented for some time, Universal Credit is damaging lives. The move to Universal Credit from tax credits has forced people to use food banks and made others homeless. Universal Credit pushes people further into poverty.
In 2018, Philip Alston, the UN special rapporteur on extreme poverty, stated that poverty in the UK is a “political choice” of the ruling Conservative Party. He also claimed that Universal Credit “is fast falling into Universal Discredit”. Far from creating any sort of “caring” or “compassionate” benefits system, Alston insisted that the motivation behind welfare cuts and benefit changes is “ideological”. Alston’s findings echo those of this report because he also said that:
The costs of austerity have fallen disproportionately upon the poor, women, racial and ethnic minorities, children, single parents, and people with disabilities.
Perhaps it’s no surprise that the DWP sat on this report for a year and a half.
Featured image via Wikimedia – UK Government / Wikimedia – UK Government
