Why Universal Credit was flawed from the start

The Lords Economic Affairs Committee has just held an inquiry into Universal Credit (UC). As Z2K outlined in our response to this inquiry, 10 years on and many delays later, UC is failing to deliver on its original aims because these aims were either misconceived or subject to bad design decisions.

Becca Stacey, Policy and Campaigns Officer

2 March 2020

10 years ago, Ian Duncan Smith introduced his brainchild: UC. This policy was implemented by people who had a complete lack of understanding about the day-to-day reality of the many people who would be pushed into claiming this benefit.

UC aims to make sure that work always pays more, and that benefits do not exceed the average salary. This completely misses the point that for many people, work is not suitable because of a disability or health condition. As a result, UC fails to deliver on its aim of incentivising these people into work, instead penalising them for not being able to work by making them worse off, as if they are completely unvalued within society.

Adults with learning, social and mental health disabilities lose between £400 and £500 a year as a result of the rollout of UC, and 22% of people with a disability, or those who live with someone with a disability, lose at least £1,000 a year from UC, compared with 14% for other claimants. These figures are especially worrying given that some of our clients’ legacy benefit support has not been protected when they transition onto UC.

As well as losing money on UC, UC’s assumption that everyone can and should work results in many of our clients who are disabled or have health conditions being incorrectly assessed as ‘fit for work’ and forced into undertaking work requirements that are not suitable for them. It can be difficult to challenge this, because UC assessment decision letters are much less detailed than they were for Employment and Support Allowance, and omit crucial information such as how many points the claimant has scored for each “indicator” and what the healthcare professional noted during the face-to-face assessment. What’s more, UC claimants appealing an incorrect assessment are required to start actively seeking work for their standard allowance to continue. A claimant can ask for their claimant commitment to be reviewed in light of their disability or health condition, but this is at the discretion of their work coach.

UC’s brand of “getting people into work” is also given by the Department for Work and Pensions (DWP) as the reason for monthly payments, to prepare people for “real life” work. However, 40% of UC claimants are paid by their employer more frequently than monthly. As a result, UC is causing budgeting challenges for many claimants who are used to receiving income or legacy benefit payments more regularly.

UC aims to simplify the benefits system, making it easier for people to understand. However, UC’s insistence on having everyone, including those who are not digitally literate, manage their claim via online accounts has led to many people missing important decisions and information about their UC claim, or having their claim closed when they don’t accept online claimant agreements. Vulnerable claimants are not adequately supported in managing their claim, and whilst the DWP is supposed to make efforts to contact vulnerable claimants beyond posting on their UC journal before their claim is closed, in practice this does not happen. Many of our clients also find it difficult to work out the breakdown of their payments and deductions on their UC journal entitlement pages.

Whilst UC aims to cut back on error, many of our clients find themselves worse off as a result of DWP error. If someone has been overpaid their UC due to Departmental error, up to 15% of their standard allowance is deducted from future payments until this overpayment is repaid, leaving people with less money each month than they had expected, through no fault of their own. Many people also receive incorrect UC payments due to fluctuating income, and we’ve seen numerous errors concerning Managed Payments to Landlords (MPTL), including UC housing element payments being made to clients despite them having successfully requested a MPTL on the basis of their vulnerability.

People are suffering because UC’s aims were either misconceived from the start or subject to bad design decisions. As a result, too many people receive too little money to live a stable and dignified life, and don’t have enough control over how and when they receive and manage their money. This is why, until a series of major reforms take place to UC that we outlined in our response to the Lords Economic Affairs Committee inquiry, we believe that the natural and managed migration onto UC should be stopped. We will also continue to lobby decision-makers for a UC system that provides the income and support people need.