A single parent with one child now needs to work 25 hours a week under Universal Credit (UC), to receive the same income she gets for 16 hours a week under tax credits. Nine hours more work for the same income. Something’s clearly not right and it begs the question: why?
Because all of the core promises made in good faith to us, during the 2011 Welfare Reform Bill which set up UC, have been broken.
The first broken promise – work would always pay. Not true. Partnered women, if the second earner in a family with two children, can lose 93p in the £ of their earnings – when you include the benefit taper, National Insurance and income tax, 15% child care costs and the average 20% council tax payments. (To save the Treasury money, local schemes replaced the national council tax benefit, under which claimants paid nothing.) Add in work costs such as travel and she becomes worse off working.
The second broken promise – work would be the best route out of poverty, with UC lifting 600,000 adults and 350,000 children out of poverty. Again, not true. The Child Poverty Action Group using Institute of Fiscal Studies rather shockingly predicts one million more kids in poverty by 2021, their lives blighted for years to come.
The third broken promise – by rolling six benefits into one, ie UC, there would be simple, hassle free delivery. Once again, not true. Like many other parliamentarians, I have received heart wrenching letters from people waiting six, eight, ten, twelve weeks for their first UC payment – going without food, pawning possessions, shivering when the weather turns cold. And borrowing from friends and families, themselves struggling to stay afloat.
Yes they can ask for a fortnight’s advance payment on their first claim – half of them do – but then it’s taken out of their subsequent UC payment along with other debts, council tax and utility bills incurred during the payment delay. As this means they can lose up to 40% of their UC standard allowance for the next six months, they continue to increase their private debts (including payday loans) getting deeper into the quagmire. 79% of UC claimants are in rent arrears, often in excess of £1000, with even Housing Associations are evicting tenants because of the delays.
This is to say nothing of undertrained DWP staff giving wrong information, losing documents, recording errors, and a heavy use of sanctions. Even on those people who give notice that they can’t attend an appointment at a specified time because their employer won’t give them time off, or there is no rural public transport available at that time, or they are in hospital. All sanctioned, sometimes losing two months of UC income. All plunged further into debt, from which many will never recover – and in some cases losing their home.
Broken promises – all of them. Work doesn’t necessarily pay. Work plus UC doesn’t lift people out of poverty. And the delivery on the ground is so poor that thousands are sucked into deeper debt.
The Treasury fought UC all the way when it looked as though it might be as financially supportive, or better, than tax credits. It was determined to force cuts on UC, refuse a pause in roll out, and speed up new full service from five areas a month to 50. All bedevilled by very poor delivery.
Since April 2015, £13bn has been slashed from social security through the benefit freeze, a two child limit on benefit support, housing benefit capped whatever the rent may be and young single people losing out altogether, and cheaper Personal Independence Payments replacing the Disability Living Allowance. And at least £3billion of those ‘savings’ came from UC by cutting the taper free work allowance and an insistence on artificially long waiting periods. At the very same time however, many of us have enjoyed a cut in our future inheritance tax; and additional pension relief for higher rate taxpayers has cost some £11bn a year.
What we used to call “social security” has been deliberately stigmatized into “welfare” over the past few years. So much so that the seven million who will in due course be on UC, may be too deprived, depressed or scared to answer back. Parliamentarians being asked to accept that this is all part of a necessary period of belt-tightening austerity, need to reflect and act. What is being done to our fellow citizens is something that affects ‘us’ rather than ‘them’. Perhaps some of the divisions in our society might begin to heal.
Baroness Patricia Hollis of Heigham is a Labour Peer and a former Work and Pensions Minister