Universal Credit isn't working

The following letter was written to Steve Baker from our Political Education Officer, Alex Down. As unemployment skyrockets post-Covid, more and more people will come to experience the inadequacies of the country's benefits system and it is imperative that Steve Baker, and other elected officials, work together to improve things.

Dear Mr. Baker, Re: Universal Credit I am writing to you about Universal Credit (‘UC’) and the benefits system following the publication on 31 July 2020 of the Economic Affairs Committee’s (‘EAC’) report Universal Credit isn't working: proposals for reform. I was dismayed by many of the findings in this report which, as its title suggests, points to the fact that UC is failing millions of people in Britain, in particular the most vulnerable. We have witnessed the demand for UC surge at an unprecedented rate over the past few months amid the coronavirus pandemic and I am deeply concerned at the prospect of a further sharp increase in claims as the Government’s furlough scheme winds down.

For a town like High Wycombe, where we have a far higher rate of benefit claimants than the county average, there has never been a more important time to address the shortcomings of UC to ensure that the needs of our community’s most vulnerable people are met.

With that in mind, I bring to your attention below two aspects of UC and ask that you give them your urgent attention.

  1. The five-week wait

One of the most agonising features of UC for many claimants is the period of five weeks which they must endure before receiving their first payment.

The EAC report recognises this as one of the biggest failures of EC, stating that: “the five-week wait for the first Universal Credit payment is the main cause of insecurity for claimants. Many people have nothing to fall back on during this period when their needs are most acute. The wait entrenches debt, increases extreme poverty and harms vulnerable groups disproportionately”.

The food poverty charity, The Trussell Trust, paints a similarly bleak picture by remarking that “those waiting for five weeks face destitution and were unable to eat properly, pay bills and fell into rent arrears”. Indeed, we have seen evidence of this in Wycombe. As the number of UC claimants has risen since the onset of COVID-19, we have not only seen our longstanding food bank, One Can Trust, creaking at the seams as demand for its services has risen but also the need for a second food bank to be established, Wycombe Food Hub, to ensure that the needs of our community are met. As you will know, the predominant method that claimants can use to bridge the five-week wait and keep the threat of food (and other forms of) poverty temporarily at arm’s length is an advance payment in the form of a loan from the Department for Work and Pensions (‘DWP’).

While this may offer short term relief for claimants, it is in reality a highly punitive way to treat some of society’s most exposed citizens as it casts them under an immediate debt shadow and sets in motion a reduction to their future benefit awards to cover the repayment instalments. It is little wonder that a report carried out by the debt charity, StepChange, showed that 71% of the claimants taking out advance payments that they surveyed said that it had caused them and their family hardship. To mitigate the anxiety and uncertainty caused by the five-week wait, the EAC put forward in its report a recommendation for the DWP to introduce a non-repayable, two-week initial grant for all claimants. While in the longer term, I strongly believe that the need for any form of bridging payment must be removed by paying out the initial UC payment after two weeks (achieved by shortening the assessment period by a fortnight), I welcome this recommendation by the EAC which has the support of charities such as The Joseph Rowntree Foundation and The Trussell Trust. I would ask that you also show support for the EAC’s recommendation in an effort to put an end to the main cause of uncertainty for the vast majority of first-time UC claimants. 2. Inadequacy of awards One of the fundamental tenets of a welfare benefit system such as UC is to ensure that it provides claimants with adequate income to meet their costs of living. The reality, however, for a great deal of individuals and families claiming UC is that this fundamental basic right is not being met. A Trussell Trust report from 2018 illustrates this with disturbing candour by showing that only 8% of claimants surveyed said that their full UC award covered their cost of living. Shockingly, the report noted that the rate was even lower for disabled people or people with ill-health, with only 5% saying that the award covered their living costs. This is a damning indictment of UC and clearly demonstrates the urgent need for an increase in UC funding following the substantial cuts to social security over the past decade. In that respect, I welcome the Government’s recent announcement in response to COVID-19 that it will temporarily increase the standard allowance in UC by £20 a week on top of the planned annual uprating for a period of 12 months. While this measure is a move in the right direction, I would draw your attention to the fact that even with the £20 increase, a Wycombe resident aged 25 or over in receipt of the standard allowance would be entitled to receive just £94 a week in the form of an UC award. As Unite points out, in contrast, if UC was paid at 80% of the real living wage, the benefit award would be £260 per week, £166 higher per week than the UC award with the temporary £20 increase applied. This is clear evidence of the need for an uplift to the standard allowance and the first step towards achieving this is to make the £20 weekly increase a permanent increase. This measure is supported by the EAC’s report in which it recommends that “the Government should commit immediately to making the increase in the standard allowance permanent. Universal Credit should be set at a level that provides claimants with dignity and security”. The Government has estimated that by 2023 nearly seven million people will be claiming UC. Many hundreds, if not thousands, of these claimants will be Wycombe residents. It is high time that we see you, as our representative in Parliament, taking a far more vocal and visible stance towards backing the reforms that are needed to UC. Eradicating the poverty, anxiety and hardship that is inflicted on the most vulnerable and marginalised people in Wycombe by UC must become one of your top priorities. I therefore call upon you to proactively join the calls for the DWP: 1. to introduce a non-repayable, two-week initial grant for all UC claimants, and 2. make the £20 weekly increase to the UC standard allowance permanent. I look forward to hearing from you in relation to this. Yours sincerely,

Alex Down

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