Last week Chancellor Philip Hammond delivered his second budget as Chancellor of the Exchequer. His announcement included a £1.5bn package to “address concerns” about the delivery of Universal Credit, including scrapping the seven day waiting period and increasing repayment period of advances from six to 12 months.
Like many welfare reforms, Universal Credit has faced months of scrutiny from campaigners, politicians and the general public. While the purpose of the policy – to streamline benefits and prepare people for a monthly wage – is acceptable, the design and implementation of Universal Credit has driven vulnerable people further into poverty.
We’ve seen from research conducted with Cardiff Metropolitan University and from speaking with our members that the flaws in the policy have caused a negative ‘dominos’ effect for people already living on the poverty line. Waiting six weeks or more for payment has left thousands in ‘dire straits’, living week by week on little or no savings. In this circumstance, survival is key – and inevitably food and necessities are prioritised over rent. This then results in rental arrears, which have almost trebled in Wales since the roll-out of Universal Credit first began. These factors significantly impact on housing associations in terms of cash flow, arrears levels and resource within the organisation.
The reality is, a policy set up to prepare people for work has resulted in many not being able to afford to eat food, wash their clothes, or put the heating on, let alone travel to job interviews. The majority of people on Universal Credit are eager to work, yet temporarily haven’t been able to due to circumstances beyond their control such as redundancy or illness. The added pressure of asking family and friends for money, searching for their nearest foodbank, or wondering when they will next be able to afford their rent is not an adequate basis to successfully job search from.
We, along with our members, politicians and fellow campaigners across the UK have pressured the Government to review and amend the flaws in the policy. The Chancellor’s announcement was welcome news, but is his commitment enough to mitigate the hardship people are facing?
As of October 2017, 24,517 households across Wales were claiming Universal Credit, meaning that the roll-out is only 6% complete. In many communities where the full service hasn’t even been rolled out yet, many are already suffering significant hardship. For instance Merthyr Valley Homes has seen foodbank usage doubling over the past year, with some in the area stating that it’s the worst hardship seen since the miner’s strike.
As a nation, Wales has a higher dependence on working age and social security benefits than other UK countries. And with 400,000 more expected to be transferred onto Universal Credit by 2022 (31% of all households in Wales), we are expecting those already in a difficult situation to be further impacted by the policy if more changes aren’t made.
So what needs to happen now?
As the decrease in waiting time won’t come into effect until February, we are calling for the UK Government to immediately pause the rollout of Universal Credit to prevent families being left with no money for six weeks or more. This pause should be used to review and amend the significant issues with the policy including:
The current six week waiting time causes significant hardship and pushes many Universal Credit recipients into poverty. It is rare for claimants to have savings or the means of covering living expenses during this prolonged period without payment, meaning they haven’t got the money to live on. Reducing the overall waiting time further will limit the time claimants have no income for. Offering advance payments is not a solution, and will mean tenants will be driven further into debt in the long-term. Compressing the payment processing days to under four weeks is a more manageable time period for many people. We also believe tenants should have an option to receive payments more frequently than monthly after the initial payment.
Faster payment of housing support and the option to pay directly to the landlord
We urge the Government to ensure housing support is paid as soon as it is verified, thus reducing the risk of claimants falling into rent arrears. There is also a need for tenants or landlords to be able to request for housing support to be paid directly to their landlords. This is likely to reduce the risk of arrears and ensure landlords receive full payment of rent.
Improve communications between the Department of Work and Pensions, tenants and landlords
Some of the issues surrounding Universal Credit could be targeted by improving communications between DWP, tenants and landlords. The development and introduction of a landlord portal, combined with trusted partner status, assists housing associations when verifying tenants’ rent and requesting direct payments of rent. It’ll ultimately speed up the verifying process, ensuring claimants receive their first payment on time, preventing future arrears. While these features will support landlords and tenants, there is a risk that some areas will face a ‘postcode lottery’, and not have access to the portal for many months – meaning that many tenants will continue to experience delays and have to wait longer to receive their first Universal Credit payment. Currently 1 in 5 claimants do not receive their first payment on time. Research conducted by Cardiff Metropolitan University shows an accelerated rollout of the landlord portal is likely to relieve tenants’ anxiety when waiting for the verification process to be completed. This portal can be rolled out to all social landlords quickly and easily if it were prioritised by DWP, which will result in quicker access to payments for both tenants and landlords.
With the number of Universal Credit claimants on the increase (approximately 2,722 people in Wales and 75,000 across the UK will start claiming in in the run up to Christmas), it is crucial further amendments are made to the policy. It’s clear the UK Government are beginning to recognise the issues many on the breadline are facing as a result of welfare reform, however without further improvements, it’s likely we’ll be hearing examples of people in ‘dire straits’ for much longer.
All articles published on Click on Wales are subject to IWA’s disclaimer.
While you’re here, we’ve got something to ask you: will you join us?
We’re working every day to bring the right people together and generate the ideas to make Wales a world-leading force.
We’re independent of government and political parties. We provide a much-needed space for open, transparent debate about the ideas that can make Wales better.
To continue to do this, we need people like you to join us.
Join us today and you’ll be supporting vital work that’s making our country better than ever.