Big story: credit crunch

05 March 2019

Universal Credit – the new system which rolls six other benefits into a single monthly payment – has been controversial from the outset. What impact is it having on families, and what do community practitioners need to be aware of? Journalist Juliette Astrup reports.

UC iStock

Hardly a day goes by without a new story emerging in the local and national press about the hardship being brought on families by the introduction of Universal Credit (UC). The headlines tell of parents going without food so their children can eat, children turning up to school hungry, people being evicted from their homes, and worsening mental health – all linked with problems around the new benefit.

Running six years behind schedule and well over-budget, UC has been beset by problems since it was legislated for back in 2011, and it has proved hugely unpopular in its roll-out. Not only is it leaving many claimants worse off than before, but delays in claims and administrative glitches have put claimants at greater risk of hunger, debt and homelessness.

It is a far cry from the ambitions at the outset for a simpler system which would make people better off in work. So what’s going on?


What is Universal Credit?

UC is a benefit payment for people in or out of work, which replaces a number of benefits and tax credits: housing benefit, child tax credit, income support, working tax credit, income-based jobseeker’s allowance and income-related employment and support allowance.

The theory was to make sure it always pays to work, rather than remain on benefits. UC was intended to streamline a complex system, and smooth out the cliff edge that saw people lose a big chunk of their benefits if they started working more than 16 hours a week, reducing payment gradually as they earn more instead.

The payment is made up of a basic allowance plus separate elements for housing costs, bringing up children, caring or sickness and disability, and is also impacted by income.

It is paid in arrears once a person’s monthly income has been assessed, meaning new claimants may have to wait up to five weeks before they receive any payment. And for couples who are both entitled to UC, a joint payment is made into a single bank account.

UC roll-out began in October 2013 and is now available in all areas for new claimants. The next phase is moving those on ‘legacy benefits’ across to the new benefit – a process set to be completed by March 2023.


What is going wrong?

It is not just the headlines which tell a damning story about UC. A National Audit Office (NAO) report concluded that UC causes unnecessary hardship and is not providing value for money.

It also finds that the Department for Work and Pensions (DWP) has ‘not shown sufficient sensitivity towards some claimants and that it does not know how many claimants are having problems with the programme or have suffered hardship’ (NAO, 2018).

According to Citizens Advice (2018), one in six people aren’t paid in full on time, and this figure is worse for people who get extra amounts in their UC payment for rent, childcare or for disability or health problems.

Often the delays are because people struggle to provide the evidence required to complete their claim (Citizens Advice, 2018). The DWP’s own evidence shows that 43% of people needed more support making a claim, and that 44% of people needed multiple attempts to complete their UC claim (DWP, 2018).

An even more recent survey (DWP, 2019) found that UC has the lowest claimant satisfaction rates of any welfare benefit, with one in 10 saying that they were ‘very dissatisfied’ with their experience, and nearly one in five reporting difficulties in their dealings with the DWP.

The latest furore reported in the press has been around so called ‘deflection scripts’ being used in DWP call centres to deflect callers to use the services online where possible.

Even if claiming was trouble-free, the reality is that UC makes some people worse off. Around 2.2 million working families are expected to gain, with an average increase in income of £41 a week, but 3.2 million working families are expected to be worse off, with an average loss of £48 a week, and 600,000 of those losers-out, mostly couples with children, will no longer be entitled at all (Resolution Foundation, 2017).

How are families impacted?

The issues with UC, combined with other changes to the benefit system such as the benefits cap, are now widely understood to be a contributing factor in rising poverty levels in the UK – particularly in-work poverty.

The latest report by the Joseph Rowntree Foundation (JRF) finds that child poverty has been rising since 2011-12, and 4.1 million children are now living in poverty, a rise of 500,000 in the last five years. Virtually all of this increase in child poverty has occurred across working families (JRF, 2018).

Last year the UK’s concerned children’s commissioners came together to call for the roll-out of UC to be halted until a proper impact assessment is undertaken into its effect on families.

Anne Longfield, children’s commissioner for England, said: ‘There is no doubt in my mind that the biggest losers under Universal Credit are families with children, especially single parents.’

She adds: ‘Over the last two years, an increasing number of parents and professionals have raised with us their concerns about Universal Credit. Their stories paint a picture of a system beset with complications and flaws, which is often putting enormous stress and strain on families, some of them already on the verge of crisis.’

Perhaps one of the most telling markers is foodbank usage. One anti-poverty charity found that in areas where UC goes live, there is an upsurge in demand on its local foodbanks (Trussell Trust, 2018). On average, 12 months after roll-out, foodbanks see a 52% increase in demand, compared with 13% in areas without UC or with UC for three months or less.

Emma Revie, CEO of the Trussell Trust, says that for many people ‘the new system is making an already bad situation worse’. She adds: ‘Foodbanks have seen first-hand the impact on people when there’s an issue with Universal Credit: families facing eviction, parents skipping meals and people in insecure work struggling to afford the bus fare to work. The five-week wait for a first payment, the lack of available support to apply online, the inability of payments to cover the cost of living for people who need it most, and poor administration are just some of the issues people are facing.’

As well as impacting foodbank usage, UC has also been found to contribute to the number of people seeking advice over rent arrears – already up by more than 40% in Scotland between 2012 and 2017 (CAS, 2018).

These effects were reflected in the damning statement by Professor Philip Alston, United Nations special rapporteur on extreme poverty and human rights, on his visit to the UK. He referred to ‘far too many instances in which Universal Credit is being implemented in ways that negatively impact many claimants’ mental health, finances and work prospects.’

And he also points out that the five-week delay actually often takes up to 12 weeks, and so ‘pushes many who may already be in crisis into debt, rent arrears, and serious hardship, requiring them to sacrifice food or heat’ (Alston, 2018).


What’s the latest?

Pressure from MPs, charities, think-tanks and others hasn’t fallen on entirely deaf ears. January saw a series of major U-turns announced by Amber Rudd in her first major speech as work and pensions secretary.

Just three weeks before it was due to happen, plans to extend the cap on benefits for more than two children to include children born before April 2017 was scrapped.

She also announced that she would hold off on the migration of existing benefits claimants onto the new system until the process had been tested on a sample group of 10,000 people, and that the freeze on working-age benefits should be lifted next year.

These are the latest in a series of changes. From April, the DWP will fund Citizens Advice to provide a ‘Universal Support’ scheme to walk claimants through each step of applying for UC. And in the November budget, the government announced a £1.5bn package to improve UC, and committed to introducing an additional non-repayable financial payment for those moving from housing benefit to UC to help people pay their rent, changes to advance payments so claimants can receive 100% of their payment as an advance, and pay it back over 12 months, all claimants being told they can get an advance payment, and making the UC helpline free.

But even after this budget, among working families with children, while 1.5 million are expected to be better off, the same number are expected to be worse off (Resolution Foundation, 2018).


What do CPs need to know?

UC, which people often claim for the first time during a turbulent period such as after the loss of a job or the ending of a relationship, can compound existing issues and bring new problems to bear on families.

Chief executive of the Child Poverty Action Group Alison Garnham says: ‘Our early warning system which collates cases from across the UK shows that families can come up against a range of problems on Universal Credit. Many families struggle with the five-week wait for a first payment, childcare costs have to be paid up-front before they are reimbursed, and some claimants find if they’re paid early some months because of a bank holiday or weekend and so receive two pay cheques in a monthly assessment period, their UC award can fluctuate which makes budgeting especially hard.

‘Cuts to UC have also meant that some people are simply worse off than they would have been on some existing benefits, like tax credits. And, worryingly, 15% of claimants don’t have internet access at home, yet the assumption is that people will claim online.

‘Practitioners can help by signposting families struggling with UC to welfare rights advisers such as Citizens Advice. It may be that families can have an advance on their entitlement – although these are repayable – or they may be able to request fortnightly rather than monthly payments, but the key is to get expert welfare rights advice as soon as any problems emerge – even if the problem is actually making the initial claim.

‘If practitioners are attuned to the pitfalls for claimants and if they are willing to point their clients towards sources of independent advice, they might just help to minimise the risk of hardship for families on UC.’ 


Universally challenged Infographic


What can you do?

  • Don’t be afraid to ask whether a family is having any difficulty making ends meet, and be ready to give details of local welfare rights advice services, children’s centres, parents’ groups and so on. General money advice services may be less stigmatising than benefits support.
  • If you are seeing effects of poverty or changes to benefits on children, consider submitting evidence to CPAG through its early warning system:
  • Think about your contact with parents and families and what resources you expect them to have and afford.  Don’t assume everyone knows which services are free, and is already receiving everything they are entitled to – many families miss out on things like Healthy Start vouchers, free medicines for children and the free childcare place.
  • Make links with local NHS services to ensure that you are working together in the best interests of your clients and their children.
  • Be aware of local services on offer which may be of use to your clients, for example cooking classes, free swimming lessons, smoking cessation support, and so on.

RCPCH, 2018; CPAG, 2015

Image credit | iStock


Alston P. (2018) Statement on visit to the United Kingdom, by Professor Philip Alston, United Nations special rapporteur on extreme poverty and human rights. See: (accessed 12 February 2019).

Citizens Advice. (2018) Making a Universal Credit claim. See: (accessed 12 February 2019).

Citizens Advice Scotland. (2018). Rent arrears: causes and consequences for CAB clients. 
See (accessed 12 February 2019).

Child Poverty Action Group. (2015) Poverty and child health. See: (accessed 12 February 2019).

Department for Work and Pensions. (2019) DWP claimant service and experience survey 2017 to 2018. See: (accessed 12 February 2019).

Department for Work and Pensions. (2018) Universal Credit full service survey. See (accessed 12 February 2019).

Joseph Rowntree Foundation. (2018) UK Poverty 2018: A comprehensive analysis of poverty trends and figures. See (accessed 12 February 2019).

Longfield A. (2018) Universal Credit must be halted until we can guarantee children in poverty will not be impacted. See: (accessed 12 February 2019).

National Audit Office. (2018) Rolling out Universal Credit. See: (accessed 12 February 2019).

Resolution Foundation. (2018) Back in credit? Universal Credit after budget 2018. See: (accessed 12 February 2019).

Resolution Foundation. (2017) Universal Remedy: ensuring Universal Credit is fit for purpose. See (accessed 12 February 2019).

Royal College of Paediatrics and Child Health. (2018) The impact of poverty on child health. See: (accessed 12 February 2019).

The Trussell Trust. (2018) The next stage of Universal Credit: moving onto the new benefit system and foodbank use. See: (accessed 12 February 2019).