The Work and Pensions Committee hears from Lord Freud, the architect of the Universal Credit, a major welfare reform. Channel 4 News is expected to run a story on the ongoing problems with Universal Credit on its evening news. Also attached is further evidence from Croydon Council, detailing the serious problems they are experiencing with housing and emergency accommodation due to widespread rent arrears, accrued as a result of late Universal Credit payments.
Wednesday 8 February 2017, Wilson Room, Portcullis House
- Lord Freud, former Minister of State for Welfare Reform, Department for Work and Pensions
The latest update on the current status of Universal Credit, a single monthly payment intended as a simplified replacement for a set of other benefits, has raised a series of concerns and questions. The Committee has put an initial twenty of these in a letter to employment minister Damian Hinds ( PDF 1.39 MB), and has called former welfare reform minister Lord Freud to answer questions on the rollout and impact of the new benefit, which has been beset by delays and problems.
The chart below graphically illustrates the successive revisions to the rollout. As of December 2016 there were 430,000 people claiming UC: the DWP had predicted this to be fully rolled out to 6 million claimants at this point, meaning Government has reached 7% of its original target.
Successive revisions to the universal credit rollout assumption
Source: DWP, OBR
Evidence sparks further questions
The evidence the Committee heard on Monday 23 January 2017 (PDF 205KB), sparked a series of deep concerns and further questions:
Winners and losers
- Resolution Foundation: "...essentially there will now be more losers than gainers...the losers will be losing more and the gainers will be gaining less as well" (Q2)
- Resolution Foundation: "...but the main issue there is that for the types of people that you think would probably be most responsive to work incentives - single parents and second earners in particular - the cuts to Universal Credit are making their incentives weaker" (Q2)
Delayed payment of UC
- Croydon Council: "...we have seen at Croydon on average it is about 12 weeks before any form of payment is awarded, which is creating considerable pressures, as you can understand" (Q18)
Increasing rent arrears and its consequences
- CPAG: "We already see cases where the housing cost element is not calculated in that time [the standard six weeks between application and first payment under UC], so there is a further wait for housing costs. I was reviewing case studies and there were two where people were at risk of eviction because the housing cost element had not been calculated" (Q8)
- CPAG: "I have an example of a young family we were helping an adviser with where the delay meant they could not keep their agreement with their housing association, having previously had rent arrears, and court proceedings were reinitiated because their agreement to pay was weekly and they had no money for six weeks" (Q11)
- Halton Housing Trust: "The issue with ourselves and UC is that if you look at the fact that in Halton there are 12,000 tenancies that the four main housing associations have between them, there are just over a thousand of those households are in receipt of UC. 920 of them are in arrears, and if you look at the figures, UC claimants make up just 9% of all our tenancies but they account for 37% of our arrears at the moment" (Q36)
- Halton Housing Trust: "Just to give you, again, some scale, there are four times as many UC claimants in Halton in receipt of a valid notice of seeking possession compared to non-Universal Credit cases" (Q38)
- Halton Housing Trust: "The issue for us is that there are delays of about three to four weeks after the APA amount has been deducted from their UC claim to the point at which landlords receive it [Alternative Payment Arrangement, whereby housing costs are paid directly to the landlord]. Bearing in mind that this a point at which normally arrears action is at that point being taken, that further delay is more likely to incur some form of legal action or legal costs to that claimant" (Q58)
People in emergency accommodation
- Croydon Council: "What we have also found is that people in emergency accommodation— so people who are unlikely paid, incredibly vulnerable, fleeing domestic violence, mental health issues, single parents, English not their first language—are particularly hit by the approach to Universal Credit. " (Q20). In Croydon, rent collection from UC claimants in emergency accommodation has fallen from 91% to 59%, which is an annual cost to the taxpayer of £2.5 million (Q24 and written evidence)
Recovery of overpayments
- Halton Housing Trust: "Significant overpayments [because of official errors] are occurring there and those are then being recovered from the claimant without them being notified and also at the maximum 40% level, which is causing significant financial hardship for those claimants... There is, it seems, a real drive within DWP to recover those overpayments as quickly as possible, so the timeframe over which there is discretion is reduced and also the amount that can be deducted from the benefit seems to be applied at the maximum" (Qq31-32)
Inappropriate conditionality and sanctions
- CPAG: "At a recent seminar we did for advice workers...there were a couple of stories there of people with inappropriate conditionality applied whereby they had been in a position of having to choose to take a shift of work or attend an inappropriately scheduled Universal Credit interview. They were facing a “get a sanction or get in trouble at work” kind of position, so two different masters asking for mutually incompatible things, completely counterproductive to encouraging them to do more work" (Q48)
- Halton Housing Trust: " To give you one simple example, we had a claimant who was living in one of our homes who was suffering from breast cancer and was in receipt of quite intensive chemotherapy, and she was sanctioned because she was unable to use the full 35 hours a week to find work because she was physically unable to" (Q53)
- Halton Housing Trust: "Also, one of the other things I would highlight is the delays in work capability assessments being undertaken. There is a backlog at the moment and that is up to ten months...But again, that is also causing further hardship for some claimants" (Q70)
- CPAG: "Just on that last point about claimants waiting for their work capability assessment, the consequences of that for Universal Credit claimants are quite severe because the way in which conditionality works has been altered...someone waiting to be assessed under the work capability assessment on UC, who has been handing in medical certificates, can still be required to spend all their time doing work search and be work available... It is people who are very unwell and it causes them an awful lot of anxiety because they are constantly worried that if they cannot keep up with the treadmill of applying for jobs, they will face a sanction" (Q71)
Flawed Real Time Information
- CPAG: "We have seen several cases where real-time information was clearly inaccurate where the claimant had given evidence showing that it was inaccurate and where the Department had carried on making decisions on the basis of RTI, even in the face of more compelling evidence from the claimant, and that has caused clients problems" (Q68).