Home All Categories Universal Credit roll-out leading to 'a vicious cycle of debt and despair'

Universal Credit roll-out leading to ‘a vicious cycle of debt and despair’

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Universal Credit is pushing vulnerable claimants into “a vicious cycle of debt and despair”, says an MP who is calling for the roll-out of the Government’s flagship welfare reform to be halted with immediate effect.

SNP MP Stuart McDonald says Universal Credit, which is replacing a number of existing social security benefits with a single monthly payment, is forcing some people to turn to loan sharks and food banks to make ends meet.

The new benefit is in the process of being rolled-out across the country but has been beset with numerous delays and IT problems, and has faced heavy criticism over payment delays and an arbitrary six-week waiting period.

Under the new system, rent support is paid directly to the claimant who is then expected to pass it on to their landlord or housing association. Whereas under the previous housing benefit system, which is just one of the benefits being replaced by Universal Credit, rent was paid directly to landlords.

Homeless charities, landlords, and housing organisations, have warned that the new system places tenants at risk of being evicted from their homes, due to delays in housing support payments and difficulties in arranging direct rent payments, where necessary, with the Department for Work and Pensions.

Opponents of the new system say the average working family in receipt of Universal Credit will be more than £1,000 a year worse off by 2020. Lone parents are forecast to be some of the hardest hit, losing an average £2,380 a year.

Mr McDonald said: “I know from speaking to local people, advice agencies and landlords that, the roll-out of universal credit there has been a dog’s breakfast.

“It has had profound implications for the constituents concerned, and I support those who call for it to be halted now.”

“All the evidence shows that the many problems with the new system, such as the six-week waiting period, are substantially increasing poverty and causing misery for claimants.”

He added: “This is a disgrace, and it’s time for the UK Government to go back to the drawing board in order to end what has become a living nightmare for many of my constituents.

“However, if the Government insist on carrying on with their broken system regardless, they should take urgent action to resolve the predicament of too many claimants, just as the Scottish Government are looking to use their limited flexibilities to alleviate the worst features of the system.”

His comments echo those of SNP MP Drew Hendry, who recently described the roll-out of the new system as “shambolic” and warned “people are being left for months without money”.

Mr Hendry said: “Universal Credit has left no one unaffected – single parents, working families, the disabled, the unemployed and those in need of housing support are all being punished by the shambolic rollout.

He added: “Through no fault of their own, people are being left for months without money, and when they seek help it appears obstacles are put in their way.

“At the heart of this rollout there is a damning litany of failure, confusion, heartache, indignity, and a drive towards increased poverty.

“There are long delays to payments, short payments, lost sick notes and childcare receipts, misplaced documents, failure to respond and confusion between departments.

“The reality is that Universal Credit will not only fail to lift children out of poverty, it will fail to eradicate existing inequalities for families who are already struggling to make ends meet and it will fail disabled people due to the devastating cuts to Employment Support Allowance.”

He called on the Government to “bring this disastrous project right back to the drawing board”.

Work and Pensions Committee Chair Frank Field MP recently accused the DWP of having their “head in the sand” about hardship caused by Universal Credit.

The Labour MP said: “Huge delays in people receiving payments from universal credit have resulted in claimants falling into debt and rent arrears, caused health problems and led to many having to rely on food banks.

“It is bad enough that UC has a built-in six-week wait between someone applying and receiving their first payment, but we have heard that many have to wait much longer than this.”

Recent research commissioned by Community Housing Cymru (CHC) found that Universal Credit is causing significant anxiety and leaving many claimants reliant on food banks and the generosity of family and friends.

Researchers found that average rent arrears more than tripled under the new system, from £131 to a £450, and placed people at risk of eviction and homelessness.

Commenting on the findings, Chief Executive of CHC Stuart Ropke said: “This report is the first of its kind about the impact of Universal Credit (UC) from tenants’ perspectives, uniquely undertaken by tenants themselves.

“CHC’s members are actively working to mitigate the impact of UC and, while it’s heartening to read the praise for support staff from tenants, there is a lot we can learn from this research.”

He added: “UC has created a vacuum between tenants and landlords. Under the current system, many landlords do not know if their tenants are on UC and are therefore having to pay their rent themselves.

“They are often only alerted to the fact that they are on UC when they fall into arrears”, he said.

An investigation by The Guardian in February found that 8 out of 10 social housing tenants moved on to UC are falling into rent arrears or increasing the level of pre-existing arrears, placing them at greater risk of eviction.

Organisations representing more than 1m council households said that problems with processing claims had “notably worsened” over the past few months.

Chloe Fletcher, Policy Director at the National Federation of Almos, said: “Our members are reporting households being forced to turn to food banks, payday lenders and, alarmingly, loan sharks just to get by. This is storing up long-term financial problems for these families.”

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