According to a DWP (Department for Work & Pensions) survey done recently, approximately 50% of Universal Credit (UC) claimants are struggling to pay household bills. This finding can be found in a detailed report that has sparked outrage.  Many charities are demanding reform following the shocking findings on UC which combines six benefits (Housing Benefit, Income Based Jobseeker’s Allowance, Child Tax Credit, Working TaxCredit, Income Support and Income-based Employment & Support Allowance) into a single monthly payment. Universal Credit was established in 2013 as a social security benefit replacing six benefits and tax credits.
Over 800,000 new claimants are on UC. Existing claimants will commence movement to UC in 2019. Tory ministers have been on record stating that UC is fairer and ensures work pays yet the survey shows that 44% of claimants fall behind with their bills, keep up but face constant struggles or experience serious financial difficulties 3 months into their claim.
The figure isn’t any better eight to nine months into a UC claim considering it reduces to 40%, a mere 4% reduction.
A further 28-32% of claimants stated that they face challenges with household bills occasionally leaving just 25% as the number of claimants with no difficulties.
In one group, 33% of claimants confessed to borrowing money from family and friends while 11% relied on short-term loans like overdrafts. Others admitted to using charities, payday loan companies as well as doorstep lenders to survive.
A record 44% of claimants (in the first wave survey) admitted to struggling to pay utility bills. Meanwhile, 35 to 36% have housing cost arrears, and for 44% of those people who had arrears, the arrears increased significantly by the time they were 8 or 9 months into their UC claim.
According to the C.E.O. of Child Poverty Action Group, Alison Garnham, these figures are a testament that Universal Credit has failed.
However, Work and Pensions Secretary Esther McVey is of a slightly different opinion. She insists UC will make work pay. According to Mc Vey, it is evident that many people who are months into a claim are left with little to live on but Universal Credit had a strong poverty reduction potential which has been affected by big funding reductions compromising its ability to achieve original aims. Mc Vey admits there are faults in the UC design that have been left uncorrected and goes further to state that the benefit will continue to fail if the funding isn’t restored and the original design re-visited.
IFF Research conducted the DWP (Department for Work & Pensions) survey which involved 4202 people from March-September 2017.
The survey interviewed 2194 people in the 1st wave, 42% of whom offered to be questioned in the 2nd wave alongside 1422 other claimants chosen for the 2nd wave.
The survey findings also indicated that approximately 43% of the claimants were in need of support or help with their UC claim, i.e., how to register online. The findings also indicated a need to improve the scope of knowledge of Universal Credit. Authors admitted to lacking knowledge on some matters since only 51% understood that every hour worked will leave them in a better position.
Authors admitted there is “scope to improve knowledge of UC” after only 51% knew every hour they work would leave them better off.
The survey also showed some positive employment outcome with statistics such as an increase in the percentage of paid work rose from 23 to 40% at the beginning of a UC claim to eight months in.
According to the DWP, the survey indicates that most claimants have no problem managing their money with approximately 67% saying they are confident with their UC payments.
The survey which was done between March and September last year was done before any changes were made to the autumn budget.
Some changes have been made including the abolition of waiting days which has made all advance payments available immediately from day one. There has also been an introduction of a two-week additional housing cost support meant for people joining UC from Housing Benefit. The findings in the DWP report were used as a basis for introducing these changes.
The DWP is also planning to increase funding on budgeting advice as well as digital support up to £200 million making these services available to people who need them.
However, as long as claimants continue to depend on payday loans among other types of short term loans, UC has a long way to go.
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