Universal Credit so deeply flawed it should ‘come with a health warning’, say MPs

So-called “natural migration” to Universal Credit is trapping benefit claimants in the DWP “lobster pot”, struggling with a sudden drop in income and with no way back, says the Work and Pensions Committee as it publishes its latest report on the “baffling” new benefit system.

The cross-party Committee has addressed some of the fundamental design flaws in the benefit itself in a series of reports over the last two years.

Its latest report explores “the fundamental, structural flaws in the policy systems that mean even the transition from existing benefits to Universal Credit is riven with problems and difficulties that have effectively stopped the reform in its tracks”.

The Committee argues that vulnerable claimants, including severely sick and disabled people, often have no option but to claim the benefit, even though in many cases this can result in a sudden and dramatic drop in income.

MPs say claimants face an “impossible choice between hardship now or hardship later”, such as having to decide whether to apply for Advance payments which must be repaid, trapping people in a cycle of debt, or suffer severe hardship while awaiting an initial Universal Credit payment.

Committee Chair Frank Field MP said: “In the history of humankind, has there ever been an example of a Government introducing a fundamental welfare reform and none of its employees being able to tell if it will leave people better or worse off?

“Hardly surprising that baffled and anxious claimants are finding themselves trapped in what the Department chillingly calls the “lobster pot” of Universal Credit, and with much less to live on as a result.

“The UC application page needs to come with a health warning, and anyone who gets inadvertently caught in DWP’s lobster pot should be compensated.”

Litany of failures

The report lists some of the worst parts of the Government’s flagship welfare reform. These are (directly quoted):

A disabled person who gets the opportunity to move to a better adapted house, but in a different local authority area, will find themselves shunted onto Universal Credit through natural migration.

While the “Gateway” barrier has been introduced to stop this happening to some vulnerable, disabled claimants, the Court-ordered compensation to people who fell through this particular crack in the system is tied up in the regulations for Government’s attempt at a pilot of “managed migration” – leading Committee member Ruth George to ask in evidence in Parliament if Government was trying to “blackmail” MPs into passing the managed migration regulations. 

A person who is bereaved and loses their partner is classed as having a change in circumstance—which means they must immediately claim UC at a time of considerable grief and distress. The rules under UC for bereaved people are much less generous than their equivalents in the legacy system.

Recently bereaved claimants may also no longer be exempt from housing restrictions such as the ‘bedroom tax’ after the death of their partner and therefore be expected immediately to change their living arrangements at the peak of their grief to avoid plunging themselves into debt. People who have lost their partner should be able to remain on legacy benefits for a grace period of one year. 

Additional payments of two weeks of Housing Benefit, known as a “run-on”, are already available to claimants who migrate naturally. The Department has also announced run-ons of income-related Jobseeker’s Allowance, Employment Support Allowance and Income Support—but these will not be available until 2020 because the Department cannot make the necessary changes to its IT systems – ‘computer says no’, again -  until then.

This is not good enough, says the Committee:  it urges the Department to look again at the options to remove the five-week wait. Until then it must find a way to make the run-ons available by Autumn 2019.

Once moved onto UC, there is no return to legacy benefits: claimants are trapped in the Department’s chillingly-named “lobster pot”, potentially with substantially less income. If a claimant complains and the Department finds that it has misadvised them they receive compensation.

Given the sprawling complexity of the “simplified” 6-in-1 benefit,  and the dearth of information about the process and its outcome (the Committee is forced to recommend that the Department signpost claimants to an external charity, in case they wish to attempt to calculate what their new income under UC might be) the Committee says this is not enough:  claimants should be protected whether they move to UC prematurely by their own mistake or by following incorrect advice from the Department’s own staff or other organisations.

The Department should provide full compensation to all claimants who have lost out financially because they have moved to UC prematurely.

Cuts to disability entitlements mean that some disabled adults and children are among the groups most likely to see their income fall when they move to UC via natural migration. Many disabled people and those with long-term health conditions stand to lose out, as do some disabled children.

Disabled people are often more vulnerable financially and face a greater risk of hardship than non-disabled claimants.

The Government should provide payments to meet the shortfall in income for all disabled claimants who move to UC through natural migration. 

Claimants waiting for appeal decisions on their legacy benefits are being asked to take a bafflingly complex gamble with their financial future, and if their appeal is successful, they are effectively penalised by the Department because of its own incorrect decisions. 

The Committee says the Department should leave claimants on legacy benefits while they await the outcome of their appeal and pay them the money they would be entitled to under JSA.

Failure to correctly transfer decisions on a claimant’s capability for work can have drastic consequences for disabled claimants.

Not only can they find themselves with less money to live on, but they may be subject to harsher conditionality rules, with the expectation that they seek work or face sanctions.

This is particularly dangerous for this group of claimants, given that in many cases the Department has assessed that engaging with Jobcentres can put them at risk of self-harm or even suicide.

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