The government should cancel or delay reclaiming
billions of pounds of old benefit debt that is causing real
hardship to Universal Credit claimants, says a new Institute for
Government report.
Despite Universal Credit’s dreadful reputation, the
report concludes that it is no longer realistic to pause the
programme, let alone scrap it. The government should now make it
work better.
Universal Credit: Getting it to work
better warns that debt
repayment is a fast-emerging issue that currently affects 60% of
claimants – 1.5 million people. The largest part of the debt –
some £6bn out of a total of £10bn – is due to past overpayments
of tax credits which are automatically reclaimed when claimants
“migrate” onto Universal Credit – as they are doing in ever
greater numbers.
When combined with the now notorious five-week wait
for payment for new claimants, the issue of historical debt could
damage Universal Credit’s reputation further and undermine its
effectiveness.
The report argues that the improvements that are
already being made to Universal Credit, plus some further
measures, means that Universal Credit still has the
potential to achieve one of its key aims: making the transfer
into work, out if it, and back in again, smoother for its
recipients.
The report calls on the government to:
-
Address the issue of historic benefit debt
repayment, by in effect ‘writing it off’ or significantly
slowing down repayments.
-
Provide new claimants, and those being transferred
from tax credits, with a two-week ‘welcome grant’ to reduce the
reliance on advances and the debt they are
creating.
Nicholas Timmins, the report’s author and a senior
fellow at the IfG said:
“Universal Credit has a terrible reputation. But the
reality is that improvements to it have been made and it is now
working better. The two most pressing issues are that more needs
to be done to ease the transition on to Universal Credit, and
something must be done to tackle the enormous sums of old benefit
debt that Universal Credit is being used to recover. Failure to
do that will undermine Universal Credit’s
effectiveness.”
