FLAWS in the new Universal Credit system could trap benefit
claimants in poverty, a report for the Joseph Rowntree Foundation
think tank suggests.
The report, Implementing Universal Credit, accepts that
the new credit, which will replace a range of existing benefits
from next autumn, is sound "in principle", but says that
implementing it could "unintentionally" leave some claimants worse
The report's analysis declares that it would encourage people to
take jobs of fewer than 16 hours a week, but would not encourage
them to look for full-time work: "Marginal increases in earnings
alone are unlikely to be sufficient incentive to move into
full-time work." Small financial gains are "likely to be wiped out
by costs such as childcare and travel".
Also, changes to council-tax benefit and to social-fund loans,
designed to help families in crisis, would create complexity, and
were "likely to be so aggressive as to leave some people worse off
as their earnings rise".
The report, by the University of Portsmouth and the Centre for
Social and Economic Inclusion, questions whether the computer
systems at the Department for Work and Pensions (DWP) will be able
to cope. The Universal Credit is to replace the income-based
jobseeker's allowance, the income-related employment and support
allowance, income support, child tax credits, working tax credits,
and housing benefit.
IT experts described the timetable for the introduction of
Universal Credit as "unrealistic"; and the study says: "The
consequences of a system failure would obviously be serious for
recipients of Universal Credit. The DWP needs to clarify the
stand-by arrangements being put in place to ensure that claimants
are paid." The report also says that switching to monthly single
payments would be a "significant challenge" for low-income
families, and demands a more visible ombudsman for the benefits and
employment services system.
The Rowntree Foundation's chief executive, Julia Unwin, said:
"Universal Credit reforms are approaching at breakneck speed; so
the DWP must show similar urgency in addressing [these] very