Work and Pensions Committee - Universal Credit implementation: meeting the needs of vulnerable claimantsWritten evidence submitted by Jane Clout

Summary: My concern here is the method of payment of Universal Credit (UC). I hope to explain why a single monthly payment in arrears to a single individual within a claimant unit will frequently cause great hardship and distress to people who are likely to be on the breadline already.

1. At present, subsistence benefits are paid from several different sources, and at varying intervals. All payments are in arrears.

Housing Benefit (HB) is paid bi-weekly.

Council Tax (CT) Benefit goes as a credit, straight to the CT account of the claimant.

Employment Support Allowance (ESA) and Jobseeker’s Allowance (JSA) are paid bi-weekly.

Incapacity Benefit (IB) and Income Support (IS) are paid weekly or bi-weekly.

2. When claimants are migrated over to UC, they will have a gap of up to three weeks with no money to cover their necessary expenditure, which will be almost impossible to cover without resorting to high-interest “payday” type loans. This will happen for every claimant without sufficient savings, which I submit is likely to be a high percentage. Therefore migrating to Universal Credit will force a large number of people further into expensive and unsafe debt.

3. As a prior claimant of ESA for only nine months myself, I experienced the reliability or otherwise of the Department for Work and Pensions (DWP) payment system. During that nine months I was not paid in error no less than four times, and one of these occasions took a full month to sort out. In each case the fault was with the DWP. As money came in from other sources (HB, DLA) I was able to survive. With UC any DWP payment error resulting in non-payment will be disastrous for the people involved, it will remove all their funding. They will be unable to pay their rent, pay their fuel bills, get their children to school, pay for transport, medication or food.

4. People who have been managing on very little for a while will have used up resources that would otherwise cover such oversights and errors. The consequences will be greater take-up of loans from unsafe and expensive sources, a worsening of relations with landlords and other creditors, and great distress for families, sick people, disabled people and the most vulnerable that we were promised would be supported.

5. The fact that only one person in any household is the recipient of UC will cause an imbalance of power in family relations, which may well lead to relationship breakdown. What happens if the lead claimant leaves the family home? Consider the impact on children, and on demand for Social Services.

6. One partial solution would be to alter payment to two-weekly in arrears. This would not address the problem of how to deal with errors of missing payments, but would at least partly solve the initial migration gap and reduce the time people are likely to be without any money at all.

7. Another suggestion is that a substantial amount of money is set aside for a new Payment Crisis Fund, and that eligibility for two-thirds of the missing payment is triggered automatically by DWP accepting that they are in error. This would provide a second fund that can be quickly brought into play if the DWP do accept the error is theirs.

8. I understand that the single payment in arrears is likely immoveable from the statute, but unless some further thought is given to the implications, and measures put in place to counter the very real risks, it will be yet another welfare reform engine of family breakdown, higher medical and social costs, homelessness and malnutrition.

9. There are many other problems with the impact of the regulations for UC as it is currently drawn, but I will leave those for others to address. This basic structural problem, created by the monthly in arrears payment system to only one adult in each claimant unit has, I hope, been partially illuminated by the above.

23 July 2012

Prepared 21st November 2012