Universal Credit has the potential to help families
locked in poverty, but the Government must make urgent
improvements in its design, funding and delivery if it is not to
drive some towards destitution, according to a new analysis by
the independent Joseph Rowntree Foundation (JRF).
Many working families are expected to be better off
under the new system, with 3.9 million people in poverty set to
see their incomes rise by an average of £3400 a year. But
it is not good enough that 1.7 million people living in poverty
face a drop in income, on average £2500 a year.
JRF is also publishing research with Britain
Thinks on the views and experiences of people claiming
Universal Credit. This work highlighted some of the changes that
need to be made so that it offers real support instead of pushing
some towards destitution.
A claimant said:
“…you could get an advance, if you need it quickly,
but then that advance comes out whatever money you're getting.
So, you're still not left with very much at the end, by the time
you pay everything back, your loan or advance, or whatever it is,
by the time you pay it back, you're not left with
much.”
People claiming benefits, tax credits or Universal
Credit are being further locked in poverty by the current freeze
– meaning that their support stands still while prices rise. JRF
is calling for the benefits freeze to end in April, one year
early, to ensure that the benefits system provides an anchor for
families in hard times.
JRF Chief Executive Campbell Robb said:
“Universal Credit has the potential to loosen the
grip of poverty, but with underfunding and a bad system it can
end up tightening it instead. We all need public services to
support us at times – and Universal Credit is rightly intended to
reduce the number of people in poverty.
“The Secretary of State has shown willingness to get
this system working right – and the Government has demonstrated a
commitment to support working families by raising the work
allowances in last year’s Budget.
“The needs of claimants must be acted on, and that
means understanding the realities of their lives. Waiting for
five weeks without savings and when you are used to regular wages
is difficult for everyone but impossible for some. Likewise,
consistently receiving less than you need to because you are
paying back an advance can push people over the edge and into
destitution.
“To succeed, Universal Credit needs to raise the
incomes of those locked in poverty and ensure that work is a
route to a better life. Without further reform, its potential
risks being unfulfilled.The best immediate step the Government
should take would be to lift the freeze on working age benefits
this April.”
As well as ending the freeze, JRF recommends that the
Government:
-
Reduce the reliance on advances to fix problems in
the transition process, as the evidence suggests this pushes
people towards destitution.
-
Ensure all claimants receive a payment within two
weeks and make sure people can get paid regularly enough to
meet their needs.
-
Improve access to childcare proactively offering
help via the Flexible Support Fund. This would enable parents
to meet upfront childcare costs without being pushed into
debt.
One Work Coach interviewed by Britain Thinks
said:
“How do you say to somebody ‘oh you are not going to
get any money now for X number of weeks’ because they live hand
to mouth don’t they? … It is supposed to be a month but it is
about six weeks before they get any money. And if they have a
loan, then that comes off the money anyway so they are in this
vicious circle. I just feel privileged that I don’t have to do it
because it is scary.”
JRF analysis also found:
-
The move to Universal Credit is likely to lead to a
fall of 300,000 in the number of people locked in poverty in
working families.
-
However, the number of people in out of work
families in poverty is expected to increase by
200,000.
-
3.9 million people in poverty in working families
are set to see their income increase, by an average of £3400 a
year. 1.7 million are set to see a reduction, by around
£2500.
-
5.5 million people in poverty should see increases
to their income, though 3 million people in poverty are set to
see their incomes reduced.
