[Does the] Scrapheap beckon for Universal Credit?

Esther McVey © Rex Features
Esther McVey: admits many families will be poorer under UC
[Is the] Tories’ big welfare reform set to be ditched. “It’s rare that a government pauses the implementation of a flagship policy,” says Isabel Hardman in The Spectator. “There’s so much ego involved in these matters that to do so is to admit a failing.”

But in the case of Universal Credit (UC) – the Tories’ plan to merge six existing benefits into a single payment – the government has been forced to delay plans to roll out the new system to more claimants as fears grow across Parliament “that those who are already receiving the benefit are severely struggling”.

Good in theory, bad in practice

The idea behind combining a number of different working-age benefits into a new single credit is “basically sound”, says the Financial Times. Sadly, the rollout of UC has been a “shambles”. All eight million Britons receiving benefits were due to be moved onto UC by October last year. Later, the target for completing reforms was moved to 2022. Now even that is regarded as ambitious.

What’s more, it’s becoming clearer that the scheme “is also a front for deeper benefit cuts”. Esther McVey, the work and pensions minister, admitted last week that millions of families could be up to £200 a month worse off when the roll-out is complete. No wonder former prime minister John Major has “bluntly warned” that pushing ahead “could lead to a repeat of the poll tax debacle of the early 1990s, which saw riots against the Conservative government”.

The evidence of impending disaster has led Iain Duncan Smith, the former Tory leader who came up with the idea of UC, to call for a further £2bn to be pumped in to save it. Yet “the chances of universal credit working well with more money are slim”, says Phillip Collins in The Times. Its proponents should have been aware similar schemes have been considered several times by previous governments and rejected as immensely complex to implement.

On the other hand, “the chances of it working without are zero”. So given the prime minister is unwilling to put more money into it, logic suggests the best option is “to take the pain of the sunk cost and lost time and send the scheme for scrap”. But despite the recent concessions, “there is no sign of the government preparing to change course”.

UC CLAIM GAME

Burning down the government

That could be an expensive mistake for the Tories, as they battle to overcome the perception they are “a party of rich people that governs for other rich people, and neither understands nor cares about the poor”, says James Kirkup in The Daily Telegraph.

Arguing about whether UC “is a good idea being implemented poorly… overlooks some very deliberate choices ministers made to make the scheme worse”, such as cuts former chancellor George Osborne made to the amount that claimants can earn before they start losing benefits. Despite her recent talk of “an end to austerity”, Theresa May “has stood by that cut”. If UC “does burn her government down”, May “should remember she had the chance to douse the flames”.

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Universal credit: Should the benefit be paid weekly instead of monthly?

 

Picture of people entering a job centre

Universal credit is paid monthly based on the idea that the majority of people in work are paid monthly. Its creators wanted to make the experience of budgeting on benefits feel similar whether a household is in work or out.

Across the UK, 85% of all employee jobs had monthly or four weekly pay cycles in April 2017, when this data was last released.

But shorter pay cycles are more commonly found in lower-paid sectors such as retail and hospitality. And research suggests most of the one in three universal credit claimants who is working receive their pay cheques on a weekly or fortnightly basis instead.

Lloyds Banking Group, in a piece of research for think tank the Resolution Foundation, looked at seven million of its bank accounts and found that of those belonging to new universal credit claimants, 58% had been paid weekly or fortnightly in their last job, in 2016-17.

So monthly benefits payments don’t mimic the in-work experience of most people on universal credit. But why could that be a problem?

The amount of universal credit claimants receive is worked out by looking at their net pay over the previous month.

People who are paid more than once a month will receive different numbers of pay cheques in different months.

Let’s say your income is being assessed from the first of the month and you’re paid £60 every Friday:

  • In November (a month with five Fridays), you’ll be paid £300
  • In December (a month with four Fridays), you’ll be paid £240

But your benefits for December- the month when you have less money coming in anyway – are based on your earnings in November. So, that month you’ll have less income from working and less money in benefits.

In an extreme case, according to the Resolution Foundation, you might even move out of universal credit eligibility and have to re-apply.

Why does this matter?

An assumption underlying universal credit is that claimants will have to get better at budgeting.

Unlike older benefits, universal credit claimants receive all the money they’re entitled to straight into their bank account once a month.

This includes, if you are eligible, money to help cover rent. It is then up to the claimant to ensure that this money reaches their landlord.

Photo of a woman looking at a receipt

Under the old system, housing benefits were paid directly to landlords and other benefits paid to claimants twice monthly.

And according to Department for Work and Pensions research, roughly 20% of universal credit claimants with some housing support also have their payment given directly to their landlord – because they have proven difficulties with budgeting.

Housing charity Shelter points out that people on lower incomes are less likely to have the financial reserves to deal with unexpected costs such as having to replace a damaged school uniform or losing hours at work.

And for families without savings to rely on, these unplanned-for circumstances can make them reprioritise money intended for rent, leading to them getting into arrears.

The fact that benefit money is coming in three or four weeks won’t help those urgent financial pressures. And if you are getting some of your income on a weekly basis from work and the rest of it through monthly universal credit top-ups, it can become difficult to budget.

The Resolution Foundation does, however, acknowledge that universal credit is a lot more responsive to fluctuations in people’s income than the old system.

Are there alternatives?

The Department for Work and Pensions says that a number of support mechanisms are in place, including budgeting support when claimants first receive universal credit.

Claimants can get an advance on the payment of their first claim, rather than waiting five weeks from claim to payment.

This is then treated as a loan that is taken off future benefits payments for the following year.

There are also mechanisms in place for those who “genuinely can’t manage their monthly payment”.

Claimants can request for the frequency of payments to change in some circumstances (but not for the assessment period to change) and request budgeting advances.

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Universal Credit sees people seeking rent arrears advice up by 47% 

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Recommendations include that efforts are made to keep rent affordable 

The roll-out of Universal Credit has contributed to the number of people seeking advice over rent arrears rising by more than 45% in five years, according to a new report. Citizens Advice Scotland (CAS) published the paper on Thursday, which notes the increase covers the period in which the social security changes have been introduced.

Former prime ministers Gordon Brown and Sir John Major are among the political heavyweights who have recently criticised the roll-out of Universal Credit.

CAS spokesman Rob Gowans said: “The rise in rent arrears is one of the most worrying trends we see across the Citizens Advice Bureau network at the moment.

“While there are a number of factors driving this, we have no doubt that the flaws in Universal Credit are one of the main ones.

“For the past 18 months we have been calling for a halt and fix to Universal Credit. “We have set out again today the key flaws that need to be addressed, including reducing the waiting period before payment, cutting out processing delays and reducing deductions.

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“These are relatively simple changes that could make a huge difference to millions of people.” Figures from 2012/13 show there were 5,340 people seeking advice after getting into difficulty with rent payments, while in 2016/17 that number was 7,856 – a rise of 47%. The report recommends issues with the social security changes are addressed, but also calls for efforts to be made to keep accommodation affordable.

Further recommendations include that benefits should cover the cost of housing and landlords follow “best practice” when dealing with those in arrears.

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Additional causes for those finding themselves in difficulty were identified as being rent increases, low wages and lack of support for those in need. A Department for Work and Pensions spokeswoman said: “Rent arrears are complicated and they cannot be attributed to a single cause.

“Our research shows that many people join Universal Credit with pre-existing arrears, but the proportion of people with arrears falls by a third after four months in Universal Credit. ”Managed payments to landlords are available as part of the alternative payment arrangements in Universal Credit, to minimise the risk of claimants failing to pay their rent. “And we are rolling out the Universal Credit landlord portal to social landlords, which is helping us target support for vulnerable people.”

Social Security Secretary Shirley-Anne Somerville added: “With every passing day, there is more and more evidence of the damage being caused by the roll-out of Universal Credit. Families already struggling to get by are facing further debt, rent arrears and misery. “We have done what we can with our limited powers, providing recipients with choices on the frequency of their payments and paying housing costs directly to their landlord.

“But Universal Credit is a reserved benefit and the UK Government should pay heed to the growing number of voices, from former prime ministers to the Joseph Rowntree Foundation and more importantly from families the length and breadth of Scotland.

“They must call a halt to the roll-out of Universal Credit and use the Budget as the first step towards a fundamental review of this deeply flawed system.”

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Universal credit could be the greatest administrative blunder by a British government yet [you think]

Tory MPs Block Public From Seeing Universal Credit Impact Papers [Quelle Surprise]
Esther McVey has admitted ‘some people will be worse off’ and Tory MPs have blocked an attempt to obtain a government analysis of the impact of Universal Credit on people’s incomes.

MPs voted 299 to 279 against an attempt by Labour that to secure the release of the assessment drawn up by officials – a majority of 20. The move followed reports that Work and Pensions Secretary Esther McVey warned the Cabinet some claimants could be £200 a month worse off under the new benefit system.

Last week she admitted during an interview that “some people will be worse-off” on UC than under the previous system. Shadow work and pensions secretary Margaret Greenwood told the Commons today UC had been “beset with flaws in its design and delivery” and was “causing immense hardship”.

She said that 3.2 million families with children could lose around £50 a week, adding: “People are worried, but there’s no clarity from Government.” But McVey insisted the government had taken a “mature approach” to the rollout of the system.

McVey insisted the rollout of Universal Credit would continue, but said she would ensure the Government “get it right”. “We will make sure we get this benefit right. You know for why? Because the genuine concerns of the people on our backbenches want to get it right,” she told MPs.

It came as the government revealed it is facing a benefits bill of more than £1.5bn after underpaying tens of thousands of disabled claimants. An estimated 180,000 people are due arrears payments totalling £970m after under-receiving Employment and Support Allowance (ESA), Department for Work and Pensions (DWP) papers have shown.

And the cost of paying them extra after their claims have been corrected is estimated to add another £700 million over the next seven years, taking the total additional bill to £1.67 billion, an internal analysis released on Wednesday shows.

 

Govt Newspeak

The universal credit caravan, pulled by Esther McVey’s failing department, continues to trundle towards a cliff edge with a fatal lack of accountability

uni-cred-protest *image twitter

The important thing to understand about the fiasco over universal credit – whose full roll-out looks set to be delayed for the umpteenth time by ministers amid rising alarm from senior Conservatives about its impact on benefit recipients – is that it was not just predictable but predicted.

This failure did not come out of the blue. As far back as 2013 the National Audit Office was warning that the Department for Work and Pensions had grossly unrealistic expectations of how rapidly Iain Duncan Smith’s plan to roll up six different benefits into a single payment could be accomplished.

“The department was not able to explain to us how it originally decided on October 2013 or evaluated the feasibility of roll-out by this date. The…

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Tory minister denies Universal Credit is forcing people to food banks

Tory minister faces shouts of ‘pathetic!’ as he denies Universal Credit is forcing people to food banks. Work and Pensions Minister Alok Sharma was branded a “Christmas Grinch” as he faced furious MPs over the six-in-one benefit

Mr Sharma clashed angrily with MPs as he refused to confirm details of the leaked document

A Tory minister today faced shouts of ‘pathetic!’ as he tried to deny Universal Credit was forcing people to food banks.

Work and Pensions Minister Alok Sharma was branded a “Christmas Grinch” as he faced furious MPs over leaked plans to stage a major climbdown over the six-in-one benefit’s next rollout. Yesterday his boss Esther McVey admitted just 10,000 claimants out of 4million will be transferred in the first year from July 2019.

And today the BBC obtained leaked plans to offer higher transition payments, lower loan repayments and more help for the self-employed. But Mr Sharma clashed angrily with MPs as he refused to confirm details of the leaked document, calling it “speculation”. And he launched into a staunch defence of the benefit despite a charity warning food bank use rose 52% in areas where it has been rolled out.

The Trussell Trust says benefit delays are among the top reasons for people claiming more than a million three-day food parcels last year.

But Mr Sharma told MPs: “The parliamentary group on hunger did publish a detailed report on this and they concluded there are complex and myriad reasons for the use of food banks. “It cannot be attributed to the single reason.” Labour MP Angela Eagle was heard shouting: “Pathetic!”

Labour MP Angela Eagle was heard shouting: “Pathetic!”

SNP MP Alison Thewliss warned claimants in her area asking for money on December 5 will receive none until January 9. “Is the minister happy to be known as the Grinch that stole Glasgow’s Christmas?” she demanded. And Mr Sharma confirmed Ms McVey’s admission that some people “will be worse off” on the new benefit.

Those moving over directly will have transition payments. But for new claimants and people whose circumstances change, he admitted it “depends on people’s individual circumstances”.

Labour’s Jess Phillips raised the case of a woman who was sexually assaulted along with her children and was moved to the Birmingham Yardley constituency for her safety. She said: “Because of the change of circumstance, this single working mother is now £300 worse off.”

Labour will tomorrow use an obscure parliamentary procedure to force Tory ministers to reveal how many people will be worse off. It comes after Work and Pensions Secretary Esther McVey was said to have told colleagues millions of families would lose out by £200 a month. Ms McVey later admitted some claimants “will be worse off” and repeatedly refused to deny having the conversation.

Labour will use a “humble address” to request “any briefing papers or analysis” since January 2017 about UC’s impact on income and debt.

Shadow Work and Pensions Secretary Margaret Greenwood said: “The Government must come clean about its plans and make public what they know about the impact of the roll-out of Universal Credit on vulnerable people and families. “The roll-out of Universal Credit must be stopped immediately.”

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Universal credit could be the greatest administrative blunder by a British government yet [you think]

The universal credit caravan, pulled by Esther McVey’s failing department, continues to trundle towards a cliff edge with a fatal lack of accountability

uni-cred-protest
*image twitter

The important thing to understand about the fiasco over universal credit – whose full roll-out looks set to be delayed for the umpteenth time by ministers amid rising alarm from senior Conservatives about its impact on benefit recipients – is that it was not just predictable but predicted.

This failure did not come out of the blue. As far back as 2013 the National Audit Office was warning that the Department for Work and Pensions had grossly unrealistic expectations of how rapidly Iain Duncan Smith’s plan to roll up six different benefits into a single payment could be accomplished.

“The department was not able to explain to us how it originally decided on October 2013 or evaluated the feasibility of roll-out by this date. The ambitious timetable created pressure on the department to act quickly,” said the independent spending watchdog.

The NAO blew the whistle on incompetence too, warning that “throughout the programme the DWP has lacked a detailed view of how universal credit is meant to work”.

The House of Commons’ Public Accounts Committee that same year also reported that management of the programme had been “extraordinarily poor” and that there had been “a failure to monitor and challenge progress regularly, and a failure to intervene promptly when problems arose”.

It’s said that a week is a long time in politics; that everything can change remarkably quickly. But often the opposite is true: sometimes nothing changes in five years.

Those crystalline 2013 warnings were ignored by ministers. The universal credit caravan, pulled by a failing department, was allowed to continue trundling towards the cliff edge, albeit at a slower pace.

This is not about austerity – or at least the issue of benefits cuts is tangential. As Torsten Bell of the Resolution Foundation has pointed out, universal credit cannot be responsible for increases in poverty in recent years, quite simply, because it has not been extensively rolled out yet.

The responsibility there lies with the cuts in the existing benefits system pushed through by former chancellor George Osborne – and retained, so far at least, by his successor Philip Hammond.

And, as Paul Johnson of the Institute for Fiscal Studies has stressed, the apparent surge in concern that the new system will make some people worse off relative to the existing system is somewhat bizarre as this was always the explicit intention.

Universal credit was always designed to take money from some while giving more to others in the belief that this would sharpen work incentives.

It’s an indictment that so many Conservatives, not least the current work and pension secretary Esther McVey, supported the scheme without, apparently, being aware of this. Was John Major, who now warns vividly about the possibility of a poll-tax-style insurrection over universal credit, not paying attention for eight years? The time to sound this alarm was when the scheme was first proposed.

The IFS estimates that the government will need to spend at least an extra £19bn a year by 2023 to give credibility to Theresa May’s pledge to “end austerity”. But that’s just the funding required by public services to avoid further cuts. To end austerity for welfare recipients would require an additional £7bn of spending. Yet even if this money is found it will not solve the issues of practical disruption over the transition of millions of existing claimants to universal credit.

The central problem here is implementation and administrative incompetence. It’s the failure and refusal of ministers to respond to warnings and expert feedback.

In The Blunders of our Governments, published in 2013, Anthony King and Ivor Crewe look at case studies of debacles over recent years from the Conservatives’ poll tax, to Labour’s fraud-ridden “Individual Learning Accounts” and the abandoned £11bn NHS supercomputer.

“We believe there have been far too many of them and that most, perhaps all, of them could have been avoided,” King and Crewe wrote.

They identified common features in these blunders. “Decisive” ministers tend to ignore well-informed critics, who they dismiss as partisans or defenders of vested interests. There is no proper deliberation on policy, too few checks on process. There is excessive turnover of officials and ministers with oversight and responsibility for major projects. There is a fatal lack of accountability.

Iain Duncan Smith’s brainchild was too recent to feature in King and Crewe’s book. The legislation launching universal credit was only passed in 2012. But a new edition would surely install universal credit as the inglorious centrepiece of UK governmental blunders.

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SURPRISE! SURPRISE! Universal credit rollout delayed yet again

 

Holly Sargent has had to sell her possessions because of problems receiving universal credit

Ministers have bowed to pressure and are planning to further delay the rollout of flagship welfare reform Universal Credit. The system, which will merge six benefits into one payment, has been beset with problems.

Leaked documents seen by the BBC reveal plans to spend hundreds of millions of pounds to prevent claimants suffering hardship as they move onto it. The government said it always intended to introduce the benefit slowly.

Work and Pensions Secretary Esther McVey told the Commons on Monday that she had been discussing details of universal credit with the chancellor and details of this would be revealed in the Budget later this month.

The universal credit system was originally supposed to be up and running by April 2017, but is now not expected to be fully operational until December 2023. Massive overspends and administrative problems have plagued the reform.

Tories making major Universal Credit climbdown reveals leaked document

What is Universal Credit?

The policy was first announced under the coalition government in 2010. It’s supposed to simplify benefits for working-age people, replacing income support, jobseeker’s allowance, employment and support allowance, housing benefit, child tax credit, and working tax credit.

Under the old system, claimants faced a “cliff edge” where people on low incomes would lose all their benefits once they started working more than 16 hours a week.

The new system is supposed to reduce benefits gradually as earnings increase.

BBC Reality Check has broken all this down in more detail

What is the problem with it?

Pressure has been mounting on the government for weeks to either delay or halt the next stage of the reform.

Much criticism has centred on the time it takes for people applying for Universal Credit to receive their first payment – 35 days – with some claimants left struggling to pay their bills in that period.

On Monday, independent MP Frank Field said the rollout of the system in his constituency of Birkenhead had driven some female claimants to sex work.

Ms McVey offered to see what help could be offered to the women affected before adding Mr Field and jobcentre staff could inform them about the “record” level of job vacancies, adding: “And perhaps there are other jobs on offer.”

McVey DOESN’T CARE Some will be worse off on universal credit

Anger built further last week when Ms McVey said that “some people will be worse off” under the new system, amid claims 3.2 million households will lose more than £2,000 year.

The Times newspaper suggested she had told a cabinet meeting some families could lose up to £200 a month. Mrs McVey insisted, though, that the most vulnerable would be protected.

What has the BBC now learned?

Well, it appears that big changes are going to be made in an attempt to reduce the negative impact on people being moved to UC.

First off, plans have been drawn up to continue paying income support, employment and support allowance, and job seekers allowance for two weeks after a claim for universal credit has been made.

A similar policy for housing benefit was introduced in last year’s Budget, following evidence that some claimants were going into rent arrears.

Second, there are to be changes to how deductions from a recipient’s payment can be made. Claimants can ask for an advance to help them get by while waiting for their first proper UC payment – later the government takes deductions from their regular monthly award to pay that back. Under the revised plans, the maximum amount that can be deducted will be reduced from 40% to 30% of their total award each month.

Thirdly, more help is set to be given to the self-employed, after warnings they could be left in serious financial trouble because of incorrect assumptions by the Department for Work and Pensions about their earnings. But the documents seen by the BBC also make clear that these concessions might not actually be achievable.

An extract says: “We can currently offer no assurance that ultimately these proposals will prove to be deliverable, can survive legal challenges where they can be delivered, and do not invite new political criticism by generating new policy issues.”

How does all this affect the timescale?

John Major warns the Tories over universal credit

The government was intending to begin moving almost four million people onto UC from January 2019, initially in small batches. Larger scale movements were due to start next July.

Now though, initial testing has been pushed back to next summer, and large-scale movement won’t begin until November 2020 at the earliest.

The leaked papers predict that overall, the latest delay will add an additional nine months to the final deadline for full implementation.

What does the government say?

A Department for Work and Pensions statement said it was taking a “a slow and measured approach to managed migration” and wanted “to ensure the system is working well for claimants and to make any necessary adaptations as we go”.

“We will publish full plans for the next stage of Universal Credit rollout, including managed migration, in due course. Anything before that point is speculation and we do not comment on leaks.”

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Are you currently claiming Universal Credit? Please share your experience with us. Email haveyoursay@bbc.co.uk.

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