Universal Credit: Your Questions Answered

James Henderson is working on the ground in the Black Country as UC is rolled out. He’s here to answer your questions about this confusing topic.

How is UC different from what we’ve had before?

Universal Credit is arguably the biggest change to the welfare state since its creation in the 1940s. The changes are expected to affect nearly 8 million people.

There are three key changes:

  1. One benefit instead of six: UC combines six in work and out of work payments into one lump sum. This is instead of a series of payments for things like jobseeker’s allowance, child tax etc.
  2. One payment, paid in arrears: The idea of UC is that it is just one payment per month that is paid in arrears, so it arrives like a salary, after a month of work.
  3. Digital by default: UC is designed to be applied for and manged online. In many areas of the country there is now full rollout. This means all the ongoing management of the claim is online too.

What does this mean for people who are transferring to UC?

At the moment people only transfer to UC if they need to make a new claim or if they have a change in circumstance. Eventually, everyone on the six affected benefits will be transferred across.

Why are people so worried about UC?

The main problem is the sheer speed and scale of the changes. Just one of these on their own would be a big change, but many fear that the combination of these will be crippling.

Let’s look at five areas that have people worried

  1. It’s online: This isn’t a problem if you have a computer, internet access, and the skills needed to use them. The form also requires a certain level of reading and writing ability. So, if you have a 30 minute slot at the library to put in the application you’d find yourself struggling, especially if you struggle with technology or English isn’t your first language. You can’t even save your application as you go.
  2. Monthly payments: This has been put in place because there’s a common myth that people on low incomes can’t budget and this would help them learn. Often the opposite is true, however! People on low incomes have to be good at budgeting because they don’t have a lot of money to spare.

One major concern with this change is that people would have to learn a new way of budgeting, which is going to be hard and take time.

The other major concern is that people with addictions or life controlling habits will spend all of this income in one go and be left destitute until their next monthly payment.

  1. Rent: Many people’s rent is currently paid by their housing benefit, which gets paid directly to the landlord. This is a great reassurance as people know they have a roof over their head. Under UC, the default is that this is paid directly to the claimant so that they then pay the landlord.

Many homeless charities, housing associations and private landlords worry about this and the evidence in the early rollout sites is that the number of people with rent arrears has increased by as much as three, four or even five times the level of those on the old system.

  1. Couples: If you live with a partner, you must now make a joint claim. Many domestic violence charities worry about this, as it is another way for the abusive partner to have a controlling influence financially over their partner.
  2. Payment Delays: There’s a six week (recently reduced to five week) waiting period between applying for and receiving your first payment (sometimes this can be much longer). Research shows us that 4 in 10 working-age people across the nation lack a savings buffer, with less than £100 in savings at any time.

When there’s so little in reserve, 6 weeks is a very long time to wait without a new source of income. Research has shown that foodbank usage in areas of full UC service for six months or more have seen a 30% average increase.

How are you helping others prepare for this shift?

One of the main ways we are helping is by raising awareness.

I work in the Black Country and we’re working in Wolverhampton, partnering with the council to deliver a short course that explains what UC is and teaches monthly budgeting. In the new year we’ll also be partnering with Walsall Housing Group to provide similar support to their social housing tenants.

I’ve also worked with the Just Finance Foundation team to produce a short course that can be delivered in under an hour, either to claimants or to those who support them in churches, drop-ins, and charities. It is designed to help people understand and negotiate some of the complexities of Universal Credit. You can download it for free here.

What can churches and individuals do to ensure the UC rollout is as painless as possible?

Churches are already making a massive difference through things like,

  • computer skills training
  • providing computer hubs where people can apply for UC
  • running budgeting skills courses
  • letting people know what to bring to their interview
  • supporting people at their interview
  • letting people know about Advanced Payments (interest free loans to help people cover the wait for their first payments) and Alternative Payment Arrangements (these alternatives include money going directly to a landlord, money being paid more frequently, and payments being made to both people in a couple.)

Just ask yourselves as a church, could we do any of this?