New reports are ‘another damning indictment’ into Universal Credit roll-out
The UK government has come under increased pressure to immediately halt the roll-out of Universal Credit after new reports revealed that struggling homeowners, working single parents and disabled people will be the hardest hit under the new benefits system unless urgent action is taken in the next budget.
An analysis by the Policy in Practice consultancy seen by the Observer found that almost two in five Universal Credit claimants will lose £52 a week under the policy compared with tax credits.
According to the research, a million homeowners currently receiving tax credits will be worse off under the new system. They will lose an average of £43 a week.
Researchers also found that 600,000 working single parents receiving the current tax credits system will be worse off, losing £16 a week on average. About 750,000 households on disability benefits will be worse off. Their average loss is £76 a week.
The self-employed lose out under rules in Universal Credit that assume a minimum income from self-employment, usually £1,187 a month. It means that 600,000 self-employed people will be worse off.
Families with more than two children suffer as a result of changes to the law that limits state support to two children. Under the tax credits system, payments are made for more than two children if they were born before 6 April 2017. As a result, 300,000 families will be worse off, losing an average of £40 a week each.
However, the data also shows that 2 million households would gain compared to the old system, but only by £26 a week on average.
Households who do well out of the new system include 900,000 private tenants in work, gaining an average of £14.52 a week. People deemed too ill to work or to prepare to work are likely to be better off or receive the same amounts. The average household in that situation will be £7.76 a week better off.
Meanwhile the Joseph Rowntree Foundation (JRF) said £2 billion must be put back into Universal Credit to boost the living standards of almost 10 million parents and children in working families in this month’s Budget.
New analysis from the organisation shows almost three million children are now locked in poverty despite living in a working family and record employment in the economy.
JRF chief executive Campbell Robb said: “As Britain prepares for Brexit, we need to make sure working families have a firm foundation from which they can build a better life. Reforming Universal Credit by increasing the work allowances for families with children is one step that would help address the rising tide of in-work poverty.
“Action in the Budget this month would mean working families keep more of their earnings and feel the benefit in their pockets just one week after Brexit. Almost 10 million people in families with children would see this boost - a big step towards tackling the burning injustice of in-work poverty.”
SNP social justice spokesperson, Neil Gray, said Universal Credit was “not fit for purpose” and called for urgent changes - including reinstating the work allowance and lifting the benefit freeze.
The MP for Aidrie and Shotts said: “The Tories must call an immediate halt to the disastrous roll-out of Universal Credit, which has pushed families into poverty and left millions of people poorer and worse off.
“In its current form Universal Credit is simply not fit for purpose. It requires urgent and radical changes, including the reinstatement of the work allowance and an end to the benefit freeze.
“The Tory government’s miserable record on living standards is a disgrace - with soaring levels of poverty and inequality, and the majority of families left worse off than a decade ago.
“The botched roll-out of Universal Credit has left a path of devastation - cutting household incomes by hundreds or even thousands of pounds a year, taken support away from the disabled, and forced families to rely on food banks and emergency aid just to get by.
“After a decade of failed Tory cuts it is vital that the UK government uses the forthcoming Budget to end austerity, reverse the cuts to social security, and deliver meaningful investment to boost household incomes.”
In a third report, new research has revealed that almost two-thirds of private landlords with tenants receiving Universal Credit have experienced them going into rent arrears.
Based on responses from over 2,200 landlords, the Residential Landlord Association’s research exchange, PEARL, has found that 61% of landlords with tenants on Universal Credit have experienced them going into rent arrears. This is up from 27% in 2016.
The research found that on average Universal Credit tenants in rent arrears owed almost £2,400, a 49% increase compared to last year.
Over half (53%) of landlords with tenants on Universal Credit applied for direct payment to be made to them instead of to the tenant, known as an Alternative Payment Arrangement (APA). Where successful it took, on average, over two months for this to be organised, on top of the two months arrears already accrued. This has caused arrears to build up substantially.
Those landlords that have to wait for two months arrears before they can apply for direct payment are reporting that on average the APA process takes 9.3 weeks. This when added to the initial 2 months arrears accrued means that landlords are on average owed four months’ rent before they are successfully awarded direct payment. The RLA is calling for the APA process to be improved as a matter of urgency, particularly before managed migration begins next year and more families and complex cases are moved onto Universal Credit.
One fifth of landlords also reported that their mortgage lender prevented them from renting homes to tenants in receipt of benefits.
The RLA is calling for tenants to be able to choose, where it is best for them, to have the housing element of Universal Credit paid directly to the landlord.
It is calling also for private landlords to be given more information about a tenant’s claim, such as when they receive payments, where this is in the best interest of the tenant to sustain the tenancy so that suitable rent payment schedules can be arranged. At present, this is provided to social sector landlords, but not to those in the private sector.
Formal mechanisms should also be put in place to enable landlords to reclaim rent arrears where Universal Credit tenants leave a property owing rent, it said.
RLA policy director, David Smith, said: “Our research shows clearly that further changes are urgently needed to Universal Credit.
“We welcome the constructive engagement we have had with the government over these issues but more work is needed to give landlords the confidence they need to rent to those on Universal Credit.
“The impact of the announcements from the Autumn budget last year remain to be seen. However, we feel a major start would be to give tenants the right to choose to have payments paid directly to their landlord. This would empower tenants to decide what is best for them rather than being told by the government.”