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Universal Credit to blame for soaring rent arrears and food bank use, say Lords
Universal Credit is to blame for “soaring food bank usage” and “dramatic increases in rent arrears”, a report by peers has concluded.
The Lords’ economic affairs committee said the six-in-one benefit system is failing millions of people – “particularly the most vulnerable”.
While the committee said it agrees with the original aim of Universal Credit, it argued that the system is “based around an idealised claimant” and has “features that are harming many”.
The report said the five-week wait for a first payment is “the main cause of insecurity for claimants”, entrenching debt, increasing extreme poverty and disproportionately harming vulnerable groups.
It recommended that ministers introduce a non-repayable two-week grant for all claimants.
Welfare delivery minister Will Quince responded by saying the “case for Universal Credit has never been stronger” and that the system has “defied its critics” during the coronavirus pandemic.
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The committee also argued that Universal Credit urgently needs a “catch-up increase” in funding to mitigate social security budget cuts over the past decade, and the temporary, £20-a-week increase to the standard allowance that was introduced in response to COVID-19 should be made permanent.
It recommended scrapping the practice of deducting up to 30% of the standard allowance to recover £6bn of historic tax credit debt from claimants, with the debt being written off instead.
The report added that awards should be fixed at the same level for three months, as the current method for calculating payments “can result in substantial fluctuations in income month-to-month, which makes it extremely difficult for claimants to budget”.
Lord Forsyth of Drumlean, the chair of the economic affairs committee, said: “Most people, including our committee, broadly agree with the original aims and objectives of Universal Credit. However, in its current form, it fails to provide a dependable safety net.
“It has led to an unprecedented number of people relying on foodbanks and not being able to pay their rent.
“The mechanics of Universal Credit do not reflect the reality of people’s lives. It is designed around an idealised claimant and rigid, inflexible features of the system are harming a range of claimant groups, including women, disabled people and the vulnerable.”
He added that the “punitive nature” of the system “has not worked” and needs rebalancing, “with more carrot and less stick”.
Around 5.2 million people receive Universal Credit, more than 2.5 million of whom have started claiming the benefit since lockdown began in March.
In 2019/20, the government spent more than £227bn on welfare, including around £95bn on working-age benefits.
Mr Quince said: “The case for Universal Credit has never been stronger.
“The system defied its critics in unprecedented and unforeseeable circumstances, processing more than 3.2 million new claims at pace since mid-March and paying more than a million advances worth hundreds of millions of pounds to those in urgent need within days.
“We remain committed to supporting the most vulnerable in society, which is why we currently spend more than £95bn a year on the benefits system.
“We’ve also increased the Universal Credit standard allowance by up to £1,040 a year, as part of a package of welfare measures worth over £9.3bn.”
He added that the government will consider the committee’s recommendations “in detail”.
