Universal credit’s hidden cut pushes disabled people into poverty

Powered by Guardian.co.ukThis article titled “Universal credit’s hidden cut pushes disabled people into poverty” was written by Frances Ryan, for The Guardian on Tuesday 31st October 2017 13.30 UTC

Universal credit is in full-blown crisis, from cross-party criticism of its inbuilt six-week delay to a symbolic government defeat in the Commons over pausing its rollout. But one of the policy’s most shameful parts is barely being noticed: the hidden cut being forced on some of Britain’s most severely disabled people.

Philip, 41, who has multiple mental and physical health problems – including severe anxiety and depression – knows it all too well. An injury in his 30s severely damaged his left foot and he can only move on crutches.

He medically retired as a roadsweeper in 2011 and before universal credit came in he was getting by on a patchwork of disability benefits. The titles – employment and support allowance (ESA), enhanced disability premium (EDP), and severe disability premium (SDP) – sound like government jargon, but to Philip they were his lifelines.


Under “welfare reform”, lifelines can be torn away fast: this summer, Philip moved flats across south London and found himself cross into universal credit territory. Although it will not be rolled out to ESA claimants until 2019, Philip’s change in circumstance by moving house meant he was transferred onto universal credit early. What he discovered was a reality that scores of disabled people across the UK will soon be facing: neither EDP nor SDP exist under universal credit.

Do the sums and changing to universal credit means Philip is losing £40 a week. That’s a cut of more than £2,000 a year. The result is brutal. Philip can no longer afford to eat properly. Instead, he’s skipping meals. “I’m feeling physically weaker now,” he says.

Philip no longer has enough money to pay for the taxis he needs to get to his hospital appointments. “I get very anxious on public transport and don’t feel very safe,” he explains.

The financial strain doesn’t stop there. When he moved his rent was not fully paid for three weeks. He is appealing, but is now in rent arrears of over £450.

Philip’s depression has led him to attempt suicide in the past and he tells me the transfer to universal credit has made him feel suicidal again. “I’m at my wits’ end now.”

Up to half a million disabled people like Philip and their families will be financially worse off under universal credit, according to disability charities, through the removal of the disability premiums, as well as cuts to child disability payments, which could affect 100,000 children at an annual loss of £1,000. Ask the Department for Work and Pensions (DWP) and it states that the support given by SDP is now provided through personal independence payments, (Pip) and social care from local councils, and that “transitional protection” will be available when disabled people are moved from ESA on to universal credit in 2019. But press further, and it turns out that cash-strapped local authorities have no obligation to provide support. And there is no help for disabled people like Philip who are transferred early.

And that’s not all. Under universal credit, disabled claimants will face a controversial mandatory “health and work conversation” (HWC) in which they must provide information to a work coach about what jobs they can undertake, or have their benefits sanctioned. This will mean people who are often too ill to get out of bed forced into a jobcentre meeting. The DWP says not all disabled people will be required to do a “face to face” interview in the jobcentre when it is unreasonable to expect it, but campaign group Disabled People Against Cuts tells me it has already seen a case of a woman with a life-threatening illness and insufficient mental capacity being asked to attend an HWC.

Expecting people with mental health problems, learning difficulties, or those battling illness to navigate a complex benefit system is particularly cruel – and early signs of universal credit are worrying. A study by two councils in London last week reported long delays for payments are worsening people’s anxiety and depression. Grimly, it’s also emerged that some universal credit claimants are being denied free prescriptions, as well as dental care, because of confusion about eligibility. Philip finds all this hard to talk about (the benefit system makes him anxious), but he wants to publicise what is happening to disabled people. His words should be a warning to politicians: “Universal credit is pushing people into poverty.”

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Reverse cuts or backing for universal credit may collapse, says thinktank

Powered by Guardian.co.ukThis article titled “Reverse cuts or backing for universal credit may collapse, says thinktank” was written by Patrick Butler Social policy editor, for theguardian.com on Tuesday 31st October 2017 00.01 UTC

Public confidence in universal credit will collapse without an urgent £3bn cash injection to reverse cuts that are set to leave millions of families worse off, an influential thinktank has warned.

The Resolution Foundation says a spree of Treasury-driven welfare cuts since 2015 has left universal credit unable to meet its original aims of strengthening work incentives and supporting the incomes of low-income families.

It warns that the current fragile political consensus in support of universal credit risks breaking down unless ministers refinance the reform and fix multiple design and implementation problems.

The original universal credit vision of merging six benefits into one to create a simpler social security system is still “worth holding on to”, Resolution argues, but it warns the programme will fail unless ministers face up to its inherent flaws.

“The government is rightly committed to the roll-out of universal credit, but will need to relaunch the benefit to both address the design challenges that are already visible and get ahead of those that will emerge in the years ahead,” said David Finch, senior policy analyst at the foundation.

The government is under increasing pressure to make changes to universal credit amid fears that the reform will reach poll tax levels of public unpopularity. Reports at the weekend suggested ministers were considering a reduction in the current 42-day wait for a first universal credit payment.

Although David Gauke, the work and pensions secretary, proclaimed at Conservative party conference that universal credit was “working”, he subsequently came under heavy pressure from his backbenchers to make changes and announced earlier this month that 55p-a-minute charges for the universal credit helpline would be scrapped.

However, Resolution argues that big changes to the financing of universal credit are needed to restore its credibility. It warns that cuts to work allowances will be a “major drag on the living standards of families on low and middle incomes”, leaving 1m working households an average of £2,800 a year worse off by the time universal credit is fully rolled out.

“Restoring parity with the tax credit system by reinvesting £3bn a year into universal credit is essential, not only to protect living standards but also to prevent universal credit’s brand becoming synonymous with such major cuts, resulting in significant opposition to roll-out,” it says.

The current political focus is on the hardship endured by claimants forced to wait a minimum of 42 days for a first universal credit payment. Resolution calls for this to be reduced to around 30 days, with the housing rent element paid within two weeks, to minimise the likelihood of poorer claimants running up debts and arrears.

Resolution adds that a series of other design flaws are likely emerge as “real world problems” as hundreds of thousands more families move on to the system over the next few months.

These include wider awareness of changes that will leave self-employed workers up to £2,000 a year worse off, and frustration over the complicated processes for payment of childcare support that have forced some parents to give up work.

It adds: “Until recently one of the biggest strengths of the new benefit was the near-universal support for the principle underpinning it of a simpler scheme that would improve work incentives and outcomes for low-income families. That consensus is now looking seriously strained.”

A DWP spokesman said: “This report fails to acknowledge the package of support introduced to help people move into work, including unprecedented support with childcare costs and wider reforms to taxation and the introduction of the national living wage. It also assumes benefit claimants’ lives remain unchanged, but the truth is [that], under universal credit, people are moving into work faster and staying in work longer than under the old system.

“The majority of people are comfortable managing their money, but advances are available for anyone who needs extra help and arrangements can be made to pay rent direct to landlords.”

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Universal credit ‘penalises the self-employed’ report warns

Powered by Guardian.co.ukThis article titled “Universal credit ‘penalises the self-employed’ report warns” was written by Michael Savage, for The Observer on Saturday 28th October 2017 23.39 UTC

Britain’s growing army of low-paid, self-employed workers face being more than £2,000 a year worse off than employees with the same earnings as a result of the government’s flagship welfare reform, ministers have been warned.

Hundreds of thousands of self-employed workers on low incomes who are dependent on in-work benefits could eventually be affected by unfairness built into the universal credit system, according to a new analysis. Some could be forced out of business altogether.

The revelation is the latest in a series of high-profile setbacks to the programme. Earlier this month, after pressure from Labour leader Jeremy Corbyn, Theresa May scrapped a 55p-a-minute charge for using a universal credit helpline, but the prime minister has so far refused to delay the national rollout of the new system, despite evidence of claimants falling into rent arrears while waiting for a claim.

The new warning comes in a report published on Monday by the independent Low Incomes Tax Reform Group (LITRG). It states that there is “a very real possibility that people will be discouraged from starting self-employment, and existing claimants may be forced to give up their work”.

It states: “We have modelled numerous examples that show how a self-employed person earning the same across a 12-month period as an employed person can be worse off. In one example, the self-employed person received £2,600 less universal credit than their employed counterpart. We cannot see how this can be fair.”

Under universal credit, several benefits are combined into a single payment. Ministers are expected to reduce the time claimants have to wait for their first payment from six to four weeks after pressure from Tory MPs. The overall budget of the programme has been raided several times as a result of welfare cuts imposed by the former chancellor, George Osborne.

The LITRG expresses most concern over the “minimum income floor” (MIF), a claimant’s expected monthly income after tax and national insurance have been deducted. It is used to calculate universal credit payments but can penalise low-paid workers whose monthly income fluctuates, and result in some having their entitlement to state support severely curtailed. Documents from the Office for Budget Responsibility suggest that the government stands to reduce universal credit expenditure by £1.5bn by 2021-22 as a result of the MIF.

Anne Fairpo, chair of the LITRG, said: “The last 10 years have seen a significant rise in the number of people who are self-employed, many of whom are on a low income and therefore unable to afford professional advice. Universal credit is gradually replacing working tax credit as the primary welfare support for low-income working-age people.

“Perhaps the most concerning part of the self-employment regime under universal credit is the minimum income floor, which fails to account for fluctuating earnings or one-off large business expenses.

“This can lead to a situation where a self-employed claimant with fluctuating earnings can receive substantially less universal credit than an employed claimant earning a similar annual income above the level of the current minimum income floor. We cannot believe that is an intended consequence.”

Debbie Abrahams
Debbie Abrahams, shadow work and pensions secretary Photograph: Ken McKay/ITV/Rex

The government has already introduced a 12-month “start-up period” when the MIF does not apply in an attempt to lessen the impact on entrepreneurs. However, Andy Chamberlain, from the Association of Independent Professionals and the Self-Employed, warned that it was not enough.

“Fluctuating income, typical among self-employed people, can make it extremely difficult to meet the requirements of the minimum income floor,” he said. “Unless the self-employed business can reach the minimum amount required every month, access to credit is stopped. The majority of the self-employed have been operating for over 12 months, so the start-up period that has been offered does not solve the problem,” he said.

The LITRG, an initiative of the Chartered Institute of Taxation, calls for self-employed claimants with fluctuating income to be able to average their income over a period of up to a year. It also demands changes to the calculation of the MIF and an increase in the start-up period from one to two years.

Debbie Abrahams, the shadow work and pensions secretary, said: “It is deeply frustrating that self-employed people could be thousands of pounds worse off under universal credit.

“This government programme was supposed to make our social security system more responsive to the modern labour market. Yet it is not flexible enough to properly support the five million self-employed workers in Britain. Labour is calling on the government to pause and fix the programme, before millions of people are made worse off.”

A spokeswoman for the Department for Work and Pensions said: “Universal credit supports self-employed people for up to a year while they establish their business. If, after a year, the business isn’t meeting the minimum income floor, then they will have to either increase their self-employed earnings or take on additional work as part of their claimant commitment.”

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Work and Pensions Committee publishes ‘damning’ Universal Credit evidence

Chair of the Work and Pensions Select Committee, Frank Field MP, a cross-party group of MPs charged with holding the government to account on welfare and social security issues, has described new evidence on the impact of Universal Credit as the “most damning” he has ever read.

The Labour MP says evidence submitted to the Committee by the Halton Housing Trust shows how the Department for Work and Pensions (DWP) is mishandling the roll-out of the Government’s flagship welfare reform.

The Trust has accumulated over £400,000 of arrears as a direct result of the roll-out of Full Service Universal Credit, meaning just 18% of its tenants now owe 55% of all its arrears, resulting in a doubling in the number of people referred by the Trust to food banks over the last 12 months.

The Trust says Universal Credit claimants are often “miscategorised” for ‘Advance Payments’ while their claim is being processed by the DWP.

The news comes as pressure mounts on the government to reduce the mandatory six-week wait (minimum) for a Universal Credit payment, as DWP ministers continue to defend the policy by claiming Advance Payments are available for anyone struggling to cope with the long wait.

In a sample of 1,252 tenants the Trust found that the majority of claimants were eligible for a Benefit Transfer Advance while being moved from a so-called legacy benefit (like Jobseeker’s Allowance) onto Universal Credit. This is paid back during the first 12 months of a Universal Credit claim.

Those claimants who were offered Advance Payments were offered a New Claims Advance that had to be paid back within 6 months: the submission details the even bigger financial problems this caused for families.

In addition, the evidence reports:

  • The Department refuses to amend the recovery period of the Advance Payment, from 6 months to 12 months, even in the instances where they acknowledge that the claimants should have had a Benefit Transfer Advance.
  • Recovery of the Advance Payment commences immediately with the first Universal Credit payment. This means claimants are continuously playing catch up and are instantly put in debt when the repayment is deducted.
  • As the Advance Payment of either kind are recovered directly from the Universal Credit award, they are being given priority over other essential/actual priority outgoings.
  • When Advanced Payments have been provided there is a lack of any explanation to the customer that this includes a personal allowance and housing cost element. In many cases customers are unsure as to what the money they are receiving is for or what the levels of Advance will be.

Frank Field also criticised a lack of budgeting advice given to new Universal Credit claimants.

Halton Housing Trust found that this advice was not available to the vast majority of applicants. This is despite it being an essential element for many applicants at the start of the Universal Credit application process.

Local Authorities have been awarded funding to offer Personal Budgeting Support. Despite this, the number of referrals made by the Department locally in Halton has been very low.

Other problems highlighted by the Trust include:

  • Many employers choose to pay their employees early before the Christmas period. The Universal Credit regulations consider this as an increase in income and not an early payment. This triggers a review of their claim, with no payments being made until the end of the subsequent month (January).
  • A lack of coordinated approach between the NHS and DWP. The Trust has recently supported a tenant who received a £50 fine for ticking the “JSA” box on a prescription form, because the form has not been updated with a “Universal Credit” option for receiving free prescriptions, and there are no plans to do so.
  • The Universal Credit application prompts a cessation of Healthy Start vouchers if the claimants were previously in receipt along with their legacy benefit. The Healthy Start system does not yet recognise Full Service Universal Credit.

Frank Field said: “It would be difficult to think, in all my period of Chair of the Select Committee, of a piece of evidence that is so damning on the DWP maladministration which is mangling poorer people’s lives.

“This maladministration is throwing Universal Credit claimants’ finances into chaos.”

Disclaimer: This article contains Parliamentary information licensed under the Open Parliament Licence v3.0.

Labour accuses Theresa May of ‘stitch-up’ over response to defeats

Powered by Guardian.co.ukThis article titled “Labour accuses Theresa May of ‘stitch-up’ over response to defeats” was written by Heather Stewart Political editor, for theguardian.com on Thursday 26th October 2017 19.55 UTC

Labour accused Theresa May of a “great stitch-up” after the government announced that ministers would be given 12 weeks to respond when they are defeated on motions raised by the opposition.

Andrea Leadsom, the leader of the House of Commons, said on Thursday she would take up a proposal made by the veteran Eurosceptic MP Peter Bone for a minister to be obliged to issue a response within 12 weeks whenever the government lost an opposition day debate.

“Where a motion tabled by an opposition party has been approved by the house, the relevant minister will respond to the resolution of the house by making a statement no more than 12 weeks after the debate,” she said in a written statement to parliament.

“This is to allow thoughtful consideration of the points that have been raised, facilitate collective discussion across government, especially on cross-cutting issues, and to outline any actions that have been taken.”

But Jon Trickett, the shadow minister for the cabinet office, dismissed the concession and accused the government of trying to bypass parliamentary scrutiny.

“The government’s contempt for parliament and democracy is disgraceful,” he said. “After failing to win a majority at the general election, the Tories have engaged in one stitch-up after another. They’ve fixed standing committees in their favour, are attempting to grant themselves sweeping powers with the EU withdrawal bill, and now seem to have confirmed they will ignore the decisions of parliament on opposition day debates, in a cynical attempt to push through policies like the botched rollout of universal credit.

“Their great stitch-up proves that this is is a weak and divided government, led by a prime minister who is in office but not in power.”

Labour has been exploiting May’s fragile majority to raise pressing social issues, including universal credit and university tuition fees.

A motion tabled by the party calling for the universal credit rollout to be paused was passed unanimously last week, as almost all Tory MPs abstained – some of them reluctantly.

The government has been forced into a series of concessions as May adjusts to governing without a stable majority. David Gauke, the work and pensions secretary, announced last week that charges would be abolished for the universal credit helpline, an issue raised by Labour.

On Wednesday, as Labour prepared to debate the impact of changes to housing benefit on supported housing, May announced a climbdown at prime minister’s questions.

Neither the supported housing motion, nor a separate one on cuts to social care, was forced to a vote by Labour; but it believes it can continue to highlight the unpopularity of key areas of Conservative policy.

On universal credit, some potential Tory backbench rebels suggested they had been given private reassurances by the prime minister of further concessions to come.

Philip Hammond’s budget, which will be delivered on 22 November, could be another potential flashpoint if he chooses to implement controversial policies in the search for extra revenue.

Even before the general election, when May had a comfortable majority, the chancellor was forced to abandon a planned increase to national insurance for the self-employed after a backlash from backbenchers.

Valerie Vaz, the shadow leader of the Commons, complained there was a lack of consultation over legislation, and accused Leadsom of treating parliament like “House of Games”—a combination of House of Cards and Game of Thrones.

“The government should get their house in order and deal with the democracy of why we are here. We are elected as representatives to speak on behalf of our constituents,” she added.

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Scottish councils set aside MILLIONS to undo ‘devastating’ impact of Universal Credit roll-out

NINE Scottish councils have been forced to set aside almost £8 million to undo the damage caused by the UK Government’s botched Universal Credit roll-out, as MPs call for the minimum six-week wait before claimants receive their first payment to be reduced.

Freedom of Information requests have exposed the devastating impact of the Tories flawed flagship welfare reform, adding further pressure on PM Theresa May to fix what is increasingly resembling a disaster in waiting.

Opponents of the new system have seized on the shocking revelations as a further reason why the accelerated roll-out, from 5 to around 50 regions per months, should be paused to allow time to fix the broken system.

Aberdeen City Council have reportedly set aside £2.85million for the “potential impact of welfare reform which includes the roll-out of Universal Credit”, while Midlothian Council believe it’ll cost over £3 million due to increased rent arrears and having to take on additional staff at a cost of £86,000.

Highland Council have increased protection against bad debts it expects to be caused by the UC roll-out by £650,000, as well as an additional £124,000 to deal with “increased preventative work on managing rent arrears”.

Inverclyde have set aside £1.26million, while South Ayrshire Council have reserved £900,000 to cover “mitigating the impact of welfare reform” including Universal Credit. Meanwhile, Perth & Kinross Council estimate bad debts could cost around £442,000.

In total, the nine councils who responded to the FOI request have set aside £8.7 million in funds, which could have been spent on improving public services, to help undo the consequential effects of Universal Credit and other welfare changes.

SNP MSP Maree Todd has warned this could be just the tip of the iceberg, as most Scottish Councils did not respond to the FOI.

Speaking to the Daily Record, Maree Todd said: “The relentless roll-out of universal credit makes no sense. It’s driving people into poverty and severe hardship – leaving councils to foot the bill.

“Universal Credit is the worst example of unthinking Tory austerity – a policy designed to save money but actually proving very costly indeed.

“Almost £9million has been set aside by local authorities to sort out the Tories’ mess. That means funding diverted from schools, roads and vital local services.

“And the figures only represent a fraction of what price councils may have to pay once the full, devastating impact of the rollout is ­realised across Scotland.”

Universal Credit wraps six existing social security benefits and tax credits into one single monthly payment, but claimants are made to wait at least six weeks before receiving their first payment.

The Government is under mounting pressure to reduce this mandatory waiting period, as MPs from across the political spectrum urge PM Theresa May to reduce the “cruel” wait.

An urgent report from the Commons Work and Pensions Select Committee calls on the Government to cut the minimum six-week wait to a month, warning that claimants are being pushed into debt and left reliant on food banks to feed their families.

Frank Field MP, Chair of the Committee, said: “The baked in six-week wait is cruel. No one can give us any real justification for it.

“Such a long wait bears no relation to anyone’s working life and the terrible hardship it has been proven to cause actually makes it more difficult for people to find work.

“It is not too late for the Government to avert a Christmas disaster. They must act now.

“This urgent recommendation, of cutting that six-week wait, is the first step from the Committee in what I hope will be a series of reports on the Government’s ailing flagship welfare policy.”

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