Universal Credit is making Brits worse off

The way the government is attempting to modernise the UK benefits system has attracted scathing criticism, especially for the way Brits are seemingly worse off.

Universal credit is in a roll-out phase and will merge working-age people’s benefits into one monthly payment.

Universal credit was first launched in 2013, supposedly to be fully functional by 2017, yet that final phase completion date has been moved to 2023.

Moreover, not only is it delayed in rolling out, it has received scathing criticism for the way it has run vastly over budget, and in the process has delayed people’s one single monthly payment and thus making them financially worse off. At least with the six benefits, they would receive six payments a month enabling them to cover any unexpected expenses.

Why was Universal Credit installed?

Universal Credit was established to make claiming for benefits easier and combining several benefits into one payment.

To obtain Universal credit, applicants must apply online, and the benefit will replace six other ‘legacy benefits’ including:

  • housing benefit
  • income support
  • income-based jobseeker’s allowance
  • income-related employment and support allowance
  • child tax credit
  • working tax credit

These six benefits are critical for many families who are struggling to make ends, and with delays to their payments and the way they are assessed has caused severe financial hardship.

What’s worse is that many of these low-income families are borrowing more to make ends meet every month and with the cost of borrowing rising faster than wages, are sinking further into debt.

Vulnerable families seeking more help from food banks

Research released by the Trussell Trust charity this month showed the use of food banks had increased by 52% in areas where universal credit had been in place for a year or more – compared with 13% in areas where it had not been.

Despite this research, the Department for Work and Pensions is adamant that those working people on universal credit have moved into work quicker and remained there for much longer.

According to the Resolution Foundation think tank, 2.2 million families are expected to gain under universal credit, with an average increase in income of £41 a week.

However, the think tank does concede that 3.2 million families are also expected to be financially worse off, with an average loss of £48 a week.

Even the UK Work & Pensions Secretary admitted that the rise in food bank use is partly down to problems in rolling out the new universal credit.

Amber Rudd went on to state that she was “absolutely clear there were challenges with the initial roll-out” of the benefit and that the problem in accessing money was “one of the causes” of the rise.

Universal Credit will not be replaced

Although Universal credit is now available across the UK, it will not be until July 2019 that applicants will be moved onto universal credit.

Moreover, this will only be if they are a new claimant or if their circumstances change. After that, everyone on ‘legacy benefits’ will gradually begin to be moved across.

About the Author

Katre Kaarenperk-Vanatoa
Katre Kaarenperk-Vanatoa is Chief Marketing Officer at Uploan.co.uk and has been working in the consumer finance industry for more than 10 years. Katre writes about all things finance - from industry news, trends and tips on money management.

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