Universal Credit: how a disaster unfolded

Seven years ago Iain Duncan Smith promised to streamline the welfare state and bring “fairness and simplicity” to the system.

Seven years on, Universal Credit’s national roll-out is mired in confusion, opposition and claims of complexity and cruelty – the misery of having no money at all for weeks on end.

The single-payment scheme to replace six benefits is being expanded from five to 50 areas across the country this month. More are in the pipeline.

But an in-built delay means people moving from the old system have to wait at least six weeks before getting any money. It has led some families to take on new debts, while others have been forced to use food banks to avoid destitution.

Welfare campaigners have found evidence of waits of more than 13 weeks to get first payments sorted. According to the DWP’s own analysis, 24% of new claimants have to wait longer than six weeks to be paid.

Citizens’ Advice chief executive Gillian Guy describes the roll out as “a disaster waiting to happen,” one that risks “pushing thousands of families into a spiral of debt” before Christmas.

Last week, the government announced it was scrapping the 55-a-minute charge for using a Universal Credit helpline, but a sense of crisis is beginning to mount.

MPs voted 299 to zero to “pause and fix” Universal Credit last week. Although the government order Tory MPs to abstain from a symbolic vote, a dozen Conservative MPs have written to the Department of Work and Pensions (DWP) to call for the roll out to be suspended.

DWP minister Damian Hinds has promised “further progress updates in the weeks ahead,” and some have speculated backbencher pressure may force the government to use next month’s budget to put extra funding into the scheme.

It can’t be right for anyone to have no money for six weeks

“It’s a disgrace rolling it out in the run up to Christmas when people are more likely to go into debt,” says Laura Pidcock, the Labour MP for North West Durham. “But aside from that, it can’t be right for anyone to have no money for six weeks, at any time.”

“It’s impossible to separate this from the wider welfare changes – the work capability assessments, a (benefit) sanctions regime,” she adds. “I think all of it is based on the premise the majority people seeking help from the state are fraudulent or liars.”

The government claims Universal Credit is a success. Research published in September by the DWP, in conjunction with Ipsos MORI, revealed what it described as “positive findings.”

It says claimants, in general, understood the conditions to their claims (what was expected of them in terms of finding work), and that “there was also evidence of claimants finding it easier to manage monthly payments as time went on.”

Nick Phillips, from the London Unemployed Strategies campaign group, says local authorities in the capital are worried rent and council tax arrears will stack up in the months ahead.

“The long wait is built into the system so won’t be easily fixed,” says Phillips. “I’ve sat in Jobcentre presentations where I’ve had it explained, and there’s no logical, technical reason for it. It’s seems to be part of a DWP culture deterring people from trying to claim benefits.”

Beyond the initial chaos – if we presume millions eventually do get signed up – what happens next?

Experts like Phillips fear any change in employment or health circumstances will leave people going through the same bureaucratic hell – delays and difficulty proving benefit claims – each and every time.

Universal Credit is less generous on average than the benefits and tax credits that it replaces

Ministers had hoped that the Universal Credit would be magically supple enough for each individual’s payments to be tapered off gradually, so that people facing the prospect of return to work might be less likely to reject low-paid or short-term jobs.

But so far, in its early incarnation, the system has not remotely shown that kind of flexibility.

Plus, cuts introduced by George Osborne to work allowances mean less money overall. The Office for Budget Responsibility said Universal Credit “is less generous on average than the benefits and tax credits that it replaces.”

The Resolution Foundation think tank has estimated that some families could lose up to £2,800 as a result of changes to the work allowance brought in by Universal Credit.

So the miserable fight for money, the financial black hole set to open up in thousands of homes before Christmas, may well extend far beyond the holiday. IDS wanted Universal Credit to be part of his personal legacy. He may come to regret that.