The impact of Universal Credit
Date posted: Thursday 22 Mar 2018
Stephen came to see us with a letter from his landlord, warning him about rent arrears. As a new claimant of Universal Credit (UC), he hadn't realised that his Housing Benefit had stopped and that it would now be his responsibility to pay his rent himself from his UC payment. Even if he had realised, it might have been unlikely to stop him booking the flights to see his family in America, as soon as his first payment came through.
As with many mental health problems, Stephen's depression can cause him to impulsively spend money, making financial decisions that he later regrets and feels embarrassed and ashamed by. He is an example of just one kind of vulnerable person who may be affected negatively by the changes brought about by Universal Credit.
Universal Credit does however, bring certain advantages that will make life easier for some, perhaps the majority, of claimants. In many ways it is simpler than the existing system. People will find it easier to deal with one government agency rather than three; to no longer have caps on how many hours they can work; and to receive greater support with childcare costs when they get a job. Perhaps one of the most helpful features is the direct communication between DWP and HMRC, making things easier for our service users working irregular hours such as through zero hours contracts.
At the same time we fear that many of the changes Universal Credit brings risk further marginalising and excluding some of the most vulnerable claimants. There are three main concerns that are worrying us at St Luke's Hub.
1. The need for budgeting and digital skills
While a single monthly payment might allow some people a greater sense of independence and control, for vulnerable claimants such as those with addictions, learning difficulties or mental health problems, this presents a worrying risk of debt and rent arrears that could threaten people, like Michael, with homelessness.
The digital nature of Universal Credit often presents an intimidating and stressful prospect to many of the people we work with. It isn't that people don't want to increase their digital skills, or become better at budgeting, but being forced to do so as a condition of receiving the money they need to live on, can create a lot of anxiety and have a negative effect on their health.
2. Work-coach discretion and the risk of sanctions
The relationship between a Universal Credit claimant and their Job Centre work-coach is paramount. The work-coach acts as a gatekeeper to support such as 'advance payments' and 'Alternative Payment Arrangements'. They also have the power to negotiate 'claimant commitments' and impose sanctions, harsher than under the existing system, when these commitments aren't met.
While this discretion may mean flexibility and a personalised service to some, it presents risks to anyone who might struggle with communication or feel intimidated in the Job Centre environment. We worry that many of our service users will not have the confidence, trust or self-advocacy skills to explain their personal circumstances to their work coach, and will face an increased risk of sanctioning as a result.
3. Not enough to live on
Finally, we feel that current benefit levels, as well as the rates at which money is deducted right from the first payment of Universal Credit to pay back advances and arrears, risk drastically worsening people's mental and financial wellbeing. A single person could receive as little as £156 a month after deductions for an advance payment, other debts and rent arrears have been made at source.
This isn't enough to meet essential living costs, let alone support a basic quality of life or fulfil Universal Credit requirements.
Our vital role
It seems certain then, that local services such as St Luke's Hub will play a huge role, often with no extra funding, in supporting service users through this change. Wherever possible we will help people to increase their skills and confidence to manage independently. Some will become more digitally and financially included, and this can only be a good thing.
However there seems to be a significant danger that the lives of the most vulnerable claimants will become even more precarious and stressful. With risks of further disadvantage, marginalisation and poverty, they seem likely to become even more dependent on our support.
Laura McCullagh, WLM Financial Resilience Coordinator
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Posted by: Admin on Thursday 22 Mar 2018
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