The Government’s flagship Universal Credit benefit is “wrecking lives” and “systematically plunging tens of thousands of people into debt”, in spite of promises by Government Ministers to fix the broken system, it has been reported.
A Freedom of Information request by Huffington Post UK reveals that 70,000 people have taken out a Budgeting Advance, formerly known as a ‘Budgeting Loan’, reportedly because of having to wait weeks or even months before receiving their first Universal Credit payment.
This includes working people, contrary to the myth peddled by some sections of the media that only “scroungers” claim welfare benefits.
Universal Credit merges six existing benefits, including housing benefit and working tax credit, into one single monthly payment. It was supposedly designed to simplify the benefits system, but has been repeatedly criticised due to its complexity and over-complicated application process.
According to official Government statistics, there were 820,000 people on the Universal Credit caseload in March 2018. The figures obtained by Huffington Post UK suggest a significant number of these people have struggled to get by whilst waiting for payments.
Given that Universal Credit also includes support for housing costs, it would be fair to presume that many of these people may have also fallen behind on their rent. Some may have even been threatened with eviction and homelessness.
The Huffington Post UK reports that the average loan value taken out by people on Universal Credit is around £360, adding to the financial woes of (already) struggling families and individuals.
Frank Field, chairman of the Work and Pensions Select Committee, told Huffing Post UK: “Where will it end? Despite the DWP’s ludicrous state of denial, these figures further demonstrate the welfare state’s new-found role in destroying the moral economy of the working-class.
“Universal Credit is designed in a way that is so alien to how families budget that it is systematically plunging tens of thousands of people into debt.
“Worse still, the Committee is beginning to receive evidence of the debt advice, which is supposed help people through this mess, being nothing more than an empty promise from the DWP that is not delivered.
“If DWP will not accept the reality of the havoc it is wreaking on people’s lives, how can we hope they will ever fix it?”
Labour’s Shadow Work and Pensions Secretary, Margaret Greenwood MP, said: “The severity of the Government’s cuts to Universal Credit mean that too many people receiving it are experiencing real hardship.
“The Government must pause and fix Universal Credit so that people are not pushed into poverty by a benefit that is meant to protect them from it.”
The Department for Work and Pensions (DWP) rejected the suggestion that financial struggles experienced by claimants are connected to problems with Universal Credit, despite a recent admission by Work and Pensions Secretary Esther McVey that many issues still need to be resolved.
A DWP spokesperson said: “In Universal Credit, Budgeting Advances help people to pay for sudden unexpected costs, such as a fridge breaking down.
“The advance is interest-free and can be paid back over 12 months. These types of advances have existed for decades and were available on the legacy system in the form of Budgeting Loans.”