When Solutions Create Problems
As we continue The Compassion Project, we want to consider the topical issue of Universal Credit in NI and the impact it’s rollout will have on the already vulnerable members of our society.
Our Research Assistant Joey Robinson considers some of the issues surrounding the wide scale implementation of Universal Credit which may be cause for concern.
The newspaper you read will determine just how successful or otherwise the roll out of universal credit has been in Great Britain and Northern Ireland. Headlines tend to agree that people are suffering from this new process which aims to support people in financial difficulty.
Former Work and Pension secretary Iain Duncan Smith said, “universal credit is the most radical redesign of the benefits system this country has ever seen”.1 Radical it has been, a success it has not - so far at least. A structure designed to simplify the benefits system and take more people out of poverty appears to have had an adverse effect, complicating the issue and putting greater stress on those who are already vulnerable. Universal credit is failing the people it seeks to serve and flaws must be addressed to make this landmark shift in the benefits system fruitful and worthwhile.
Universal credit is available to people aged 18+ and under state pension age and is aimed at supporting those who are out of work or on low income. Full details of eligibility can be found on the website: https://www.gov.uk/universal-credit/eligibility. Its purpose is to simplify the payment of 6 individual benefits by merging them into one monthly payment, those six being: Child Tax Credit; Housing Benefit; Income Support; income-based Jobseeker’s Allowance (JSA); income-related Employment and Support Allowance (ESA) and Working Tax Credit.
Universal credit began to be phased in from 2013 in England, and it wasn’t until September 2017 that Limavady became the first town in Northern Ireland to implement it. By September 2018, all those who are eligible in Northern Ireland should have access to universal credit. The standard monthly allowance (without considering children, disability or rent) for an average single 25 year old is £317.82, with under 25s receiving an average of £251.77.2.
A leading charity in Northern Ireland, Advice NI, have called for a halt to the roll out of universal credit.3 Due to the lack of activity at Stormont, Advice NI suggest that the absence of Ministerial or Committee oversight and monitoring of universal credit here in Northern Ireland offers little protection to those that the new system will affect. A report released in November 2017 by the Institute for Fiscal Studies expects poverty to rise in Northern Ireland and links this directly, in part, to the implementation of universal credit.4 These signs and statistics should create more urgency for the government to reconsider the wide scale rollout.
The main criticism of the new process is that once people have applied for universal credit, it can take 6 weeks (average 44.4 days) for the first payment to arrive in their bank account.5 Most people wouldn’t expect a working person to wait 6 weeks for their first pay- is it fair to expect those relying on universal credit to wait 6 weeks?
In the 2017 Autumn Budget, the Chancellor announced that the wait for applicants first payment will now be cut to 5 weeks - a welcome but rather limited attempt to deal with what remains a major crack in the system. Most families have their outgoing payments exit their bank account on a specific date in a calendar month, yet the current system will force people into paying two consecutive month’s outgoings on one month’s income. Philip Hammond did also announce at the budget that housing benefit claimants could continue to receive that benefit for an extra two weeks while waiting for their universal credit payments to start in order to pay their rent on time. This is encouraging news; however we need to wait and see whether any gap emerges between the government’s words and reality for people on the ground.
Universal credit has also caused issues for landlords and placed them in vulnerable positions. The new system is designed to empower claimants to budget what they receive and pay bills themselves, including rent. However, many people simply don’t know how to budget and control their finances. One person interviewed by the BBC said, “I blow money in one day If I have it”.6 A recent story involves a landlady who was left with £9500 rent arrears because of tenants who failed to pay rent from their universal credit.7
There needs to be better protections for landlords to ensure they receive the money they are owed but claimants of universal credit cannot be made blunt scapegoats in this situation. It’s unrealistic to expect people to manage very limited finances if they’ve never been taught how to.
Part of the solution to this issue causes a new problem in itself. For people who have rent arrears or cannot manage their money effectively, an alternative payment arrangement can be organised where the housing cost element of universal credit can be paid directly to the landlord.8 Claimants will then not be in debt to their landlords, but it doesn’t solve the broader concern which is people not knowing how to independently manage their money.
As a society, we’ve neglected this underlying issue by failing to teach and support people about why it’s important and how to take ownership of their finances. We need better education and training for everyone on the importance of budgeting and managing money. The biblical principle of stewardship is vital.
Our friends at Christians Against Poverty (CAP) do a tremendous job of equipping and empowering people to take ownership of their finances and help guide them from a position of burden to freedom. As endorsed by the self-proclaimed money expert, Martin Lewis, we should look towards CAP for resources on how to help people restructure their finances.9 Churches could invest in running finance courses that are open to all which can help those in debt become liberated from financial poverty.
One of the more pressing questions around universal credit is whether to press on with its roll out or to bring the process to a halt to address the problems with implementation. Locally, the DUP have said that they would abstain on any House of Commons vote to pause the roll-out of universal credit, stating that they have concerns about the new system but will not vote against the government.10 This sets them at odds with Sinn Féin, who have called for the implementation of universal credit to be stopped immediately amid the ‘serious flaws’.11 If a local Executive is re-established they may be able to resolve this matter using a different solution under devolution.
As the Work and Pensions Committee state in their universal credit report, this new system has great merits as an idea.12 It seeks to simplify an overcomplicated welfare system, provide incentives for people to start paid work or increase their hours and ease the move into work, partly by mirroring the world of work in its operation. Against this backdrop however, the increases in rent arrears, problem debt and foodbank usage would suggest this system of universal credit has a long way to go in achieving these noble aims.