Universal Credit ‘failing millions of people’ says parliamentary report

The Universal Credit system is “failing millions of people”, a parliamentary report has said.

The controversial welfare reform needs radical change if it is to help the most vulnerable, according to a study by the Lords Economic Affairs Committee.

The study by peers states that the design of the UC welfare system is responsible for “soaring rent arrears and the use of food banks”.

The committee stated: “Cuts to social security budgets over the last decade is causing widespread poverty and hardship.

“Universal Credit needs urgent investment just to catch up and provide claimants with adequate income.

“The temporary increase in the standard allowance in response to the Covid-19 pandemic shows that the previous level of awards was too low.

“The increase should be made permanent.”

In a scathing assessment of how UC is working, the committee stated: “The Government is using Universal Credit to recover debt, mostly £6 billion of historic tax credit debt.

“Deductions of up to 30% of the standard allowance, and in some cases more, can be taken from claimants.

“This has left many households with less money than they are entitled, often at no fault of their own.

“Tax credit debt should be written off as it is unlikely to be repaid.

“The five-week wait for the first Universal Credit payment is the main cause of insecurity.

“This wait entrenches debt, increases extreme poverty and harms vulnerable groups disproportionately.

“The Government should introduce a non-repayable two-week grant to all claimants.”

The committee said the “punitive nature” of UC “punishes the poorest by taking away their sole source of income for minor infractions” and needs rebalancing.

Committee chairman Lord Forsyth of Drumlean said the cross-party committee agreed with aim of UC, but its implementation needed change.

He said: “In its current form it fails to provide a dependable safety net.

“It has led to an unprecedented number of people relying on foodbanks and not being able to pay their rent.

“The mechanics of Universal Credit do not reflect the reality of people’s lives.

“It is designed around an idealised claimant and rigid, inflexible features of the system are harming a range of claimant groups, including women, disabled people and the vulnerable.

“Universal Credit needs more money to catch up after 10 years of cuts to the social security budget.

“It requires substantial reform to its design and implementation, the adequacy of its awards, and how it supports claimants to navigate the system and find work.

“The five-week wait for a first payment must be replaced by a non-repayable two-week grant to all claimants.

“The monthly payment calculations which can result in big fluctuations to claimants’ incomes should be fixed for three months.

“Historical tax credit debt needs to be written off.

“The punitive nature of Universal Credit has not worked.

“It punishes the poorest by taking away their sole source of income for minor infractions.

“It needs rebalancing, with more carrot and less stick, particularly as large numbers of claimants will have ended up on it because of events completely out of their control.”