Earlier this week, the Department for Work and Pensions (DWP) announced further delays to the roll-out of Universal Credit (UC) because people are not moving onto the new system fast enough. Originally planned to be completed by April 2017, the government are now saying the roll-out won’t be complete until September 2024.
At present, the only people moving to UC are those who have to make a new application because their circumstances changed. The future plan is that claimants will be moved onto UC through ‘managed migration’, where they are told specifically to apply for UC. Before they start this process, the government wanted a certain number of people to have already moved over so as not to overload the managed migration process.
However, the government’s own predictions show that 900,000 fewer households than they had forecast will now move to UC between now and December 2023. The government has therefore decided to extend the roll-out by nine months to ensure the managed migration process is not overloaded by hundreds of thousands more claimants than expected.
Officially, the DWP are putting the reduced pace at which people are moving over to UC down to fewer people’s circumstances changing, calling it ‘broad stability in people’s lives’, which they attribute as being down to ‘a number of reasons including the robustness of the labour market’.[1]
However, this is not what we see across the country and this is not what Neil Couling, the Director General for the UC programme, has admitted. The BBC are showing a new three-part series on UC and ahead of the first episode, the BBC trailed some key moments including Mr Couling addressing the reasons behind the delays. He admits: ‘We’ve got a lot of anecdotal evidence of people being scared to come to Universal Credit. It’s a potentially serious issue for us in terms of completing the project by December 2023.’
This line is more akin to what we’re seeing on a daily basis. In 2018 alone, we saw thousands of people whose main reason for coming to us was related to UC. We analysed over 2,100 of these cases and found the very real fears about moving onto UC stem from both the first five weeks after the application, where claimants are left with no income at all, and from the fact that many claimants will always be worse off on UC.
Groups of people who will be worse off under UC
The people we see who are often losing out through UC are those with disabilities or who have a disabled child. Some of the drops in income can be over £100 per month and this is largely down to the abolition of the limited capability for work element in April 2017. One of our advisers in Bournemouth described how the area has used UC for two years, but they are yet to meet a service user from one of these groups who is better off under UC than they were under the legacy system. This is on top of the shortfalls people already face because, whether on UC or legacy benefits, housing benefit no longer covers rents.
Unless going through the managed migration process, claimants experiencing a large drop in income between their legacy income and UC income receive no mitigation – regardless of how large the drop is.
Moving onto UC puts people under immediate and ongoing financial hardship
The drop in income people face is often exacerbated by the first five-week wait where a claimant won’t receive any income before their claim is fully processed. In a lot of circumstances, families have to take out an advance payment from the DWP in order to survive. However, we know the advance payments have to be paid back and is subsequently deducted at a high rate of 30% a month. One of our service users approached us after moving onto UC resulted in her having a significant drop of income. She was left facing serious difficulties covering basic living costs:
‘Previously, when she was receiving Employment and Support Allowance, she had been receiving £400 per month. Once on UC, the deductions because of her advance payment and a drop in income meant she was receiving just £269 per month. This instant, large drop in income was causing significant problems – we had to issue her a food voucher because she couldn’t afford to eat.’ [2]
The five-week wait as a disincentive to work
The five-week wait can also act as a disincentive for our service users to take up work opportunities – the exact opposite effect UC had hoped to have. Even in scenarios where people could be better off under UC, the trauma of having to experience the five-week wait can seem insurmountable. One of our advisers details a case where this difficult decision was in play:
‘I had one case where a single mother with one child wished to return to work. Her choice was to stay on legacy benefits and be £60 per week worse off than if she were on UC or make a claim for UC and be left with no money for five-weeks. How can we sensibly advise on such a gamble?’ [3]
In these kinds of scenarios, which are not uncommon, people could actually turn down working opportunities for the sake of remaining on the legacy system.
Ending the five-week wait will go a long way in relieving these fears
The Director General of the UC programme is right that people are scared. Our evidence suggests that 900,000 fewer claimants than the DWP had expected is more likely to be down to the genuine fears people have about moving onto the UC system, particularly when their income is often already not covering costs. While the department have introduced measures to provide people with an extra two weeks of housing benefit when they leave the legacy system to move onto UC, this is nowhere near enough to counter these very real concerns. If the government want more people to feel safe in moving across to UC, they need to do more than delay the programme, they need to make more fundamental changes.
First and foremost, the part of UC that is supposed to cover people’s
rent must be increased so that it does – the government should increase Local Housing
Allowance so that it covers the bottom third of rents. They should also end the
five-week wait and introduce transitional protection for those migrating to UC
through a change of circumstance. If the system starts to work for people, government
might find they make more progress.
[1] Will Quince MP, Minister for Welfare Delivery in the House of Commons on 4 February 2020
[2] Some details altered for anonymity
[3] Some details altered for anonymity
