On Tuesday 4th February we saw the first of BBC Two’s three-part series about ‘Universal Credit: Inside the Welfare State’. Universal Credit is the biggest overhaul of the welfare state in a generation. It was designed to simplify the benefits systems and encourage the unemployed into work.
However, since its introduction, Universal Credit has been linked to increased rent arrear, stress, debt and food bank use as claimants are forced to wait five weeks for a first payment after moving on to the new system.
The first episode followed staff and claimants at Peckham Job Centre.
One major pitfall demonstrated on the programme was the five week wait new claimants experience before they start getting paid, a huge problem since many of them are already struggling to pay off loans they’ve been forced to take out to survive. Single mother-of-two Rachel was seen growing increasingly distressed as the mount of Universal Credit she would receive became reality.
Rachel is entitled to £997 per month, made up of £317.82 as a standard single allowance and an additional £508.75 because she had two children. She would receive more, but due to the five week wait, Rachel had been forced to apply for an advance, money which is now being paid back from her monthly entitlement to the sum of £109.87. After rent and bills, Rachel is left with £138 to live off.
What is most alarming to us at Caridon Landlord Solution is that, despite UC being designed to make work pay and empower the claimant to manage their own money, Rachel openly said she would struggle and would prefer the housing element of her payment to go directly to the landlord, in this case the local authority. This was always the case with the old-style housing benefit.
However, the system now is such that Rachel must meet certain Tier 1 or Tier 2 criteria in order for this to be accepted. To us, this means that the claimant is never really in control, even when they are trying to be responsible by ensuring rent is paid on time to the landlord through direct payments. When tenants can clearly see they will fall into rent arrears, it is little wonder that private landlords have been dissuaded from letting to tenants in receipt of housing benefit.
Another claimant, Declan, found himself homeless at 47 and depending on food bank vouchers after being made redundant and failing to find a replacement job in the construction trade. He is desperate to get a job but has so far had no luck.
Then there was the case of 61-year-old Phil who was indignant at being pressured to find a job after spending 10 years unemployed and living off benefits. Phil did eventually take a job which paid minimum wage of £8.25 an hour.Phil calculated he would only be £30 a week better off which he says is not much of an incentive to work a 37.5 hour week.
We don’t believe that Universal Credit is complete failure as there are cases where it works, but it has been poorly implemented and needs adjusting according to individual circumstances, not a blanket decision for all.
We will be watching the rest of the series closely and using our own experiences to form a response to the Lords Select Committee’s call for evidence into the economics of Universal Credit.
The deadline for submissions is 29th February. Landlords we would like to hear you views. Email Sherrelle Collman at sherrelle@caridon.co.uk