The economics of Universal Credit


Dear Sir


I work as a multi-channel adviser with South West Aberdeenshire Citizen Advice Bureau to support clients from first stage of application for Universal Credit through to their first payment.  Clients at Citizen Advice Bureaux however often need our help beyond their first Universal Credit payment.


Online claims are almost impossible for any clients who lack digital skills, computer equipment, smart phones or who live in a rural area without decent internet connection. Although their issues meet the criteria for non-digital claims, DWP staff are telling clients that they cannot claim by telephone and they should visit a library or CAB. Many rural libraries however are closing or being repurposed into community venues. Even if we at Citizen Advice Bureau could assist clients to set up an online claim, they would likely be unable to maintain an online claim going forward.


What our clients find extremely stressful is the 5 week wait to first payment. This consists of seven days waiting and four weeks assessment. Clients applying for Universal Credit often have nothing and wonder why they have to wait so long? As it is a means tested benefit, clients often have no savings to fall back on. Some clients may lack budgeting skills however even the best at managing money would struggle to make a spending plan when they are without income for months.


Quite often, a change of personal circumstances triggers a move from legacy benefits onto Universal Credit.  There are no transitional arrangements for this so tax credits stop immediately and clients struggle financiallyThey have no money for rent, council tax, food, electricity/gas or clothes for their children. Clients accrue arrears on bills and rely on borrowing money. We issue vouchers for foodbanks, otherwise they and their families would have nothing to eat.


Advance payments are causing real issues too for clients. I visited a jobcentre to shadow jobcentre advisers during my CAB training and was extremely concerned when I saw advance payments being offered freely to clients sometimes without explanation of the recovery process of this DWP loan. I observed some of these advances/ loans were for full amount of monthly benefitAt CAB, we always encourage our clients to only take what they need if offered an advance. Clients tell us however, they were accruing arrears and did not want to be short of funds while waiting for first payment. Many clients are getting deeper into debt as well as paying back these advances at around £100 a month for a year from low amounts of benefits. Some clients may be unaware they will have deductions for overpayments of a legacy benefit, not to mention sanction cuts for not complying with claimant commitment which further reduces benefit amount.


We recommend clients apply to the Scottish Welfare Fund crisis grant scheme to help them get through the 5 weeks to first payment. This is a grant, not a loan or advance but was not mentioned by job centre advisers during my shadowing there. Discretionary funds however are not available as a right and are in very short supply from local authorities.


A positive point is that in Scotland we are pleased to be able to advise clients on Scottish Choices; rent paid direct to landlord or request twice monthly payments after their first payment.


To summarise then, the financial pressures on our clients lead them into debt, potential eviction, and food poverty which ultimately affects their physical and mental health.


I hope this information is helpful and I can back up all examples I have given.

My manager is happy for me to provide evidence by way of anonymised case studies if you require.


18 February 2020