ANDREW FORSEY, FEEDING BRITAIN – WRITTEN EVIDENCE (EUC0029)

The economics of Universal Credit

This submission seeks to demonstrate the tension that exists between Universal Credit and the reality of low-paid work, as well as the impact of this tension on families’ ability to put food on the table.

The source of much of this tension is to be found within the Real Time Information (RTI) system which calculates low-paid workers’ monthly entitlement to Universal Credit. Since May 2017, more than 150,000 RTI calculations have been disputed by Universal Credit claimants. Around a fifth of these disputes are upheld.

This would suggest that, for all too many low-paid workers, the design and administration of Universal Credit has thrown household finances into chaos. Among those on zero-hours contracts or who otherwise have fluctuating hours each week, Universal Credit fails to offer the stability that families need to plan ahead. In some cases, this instability necessitates families’ use of food banks.

Paul, 61, West Cheshire

“Zero-hour contracts are no good to anybody. You need at least 40 hours a week to be able to fend for yourself and pay the bills. My universal credit payments were different each month and I could not keep up with the bills. I had to use foodbanks and got into arrears with both my rent and my council tax. I am better off not working than working in this way.”

Single Parent, Coventry

A single parent works in a care job that cannot guarantee her hours. She is paid weekly, variable amounts, oftentimes just one shift in a week, and claims Universal Credit alongside. She can never predict how much UC will be paid to her, so cannot budget for her rent, utilities and food, and relies on foodbanks to supplement her low earned income, whilst she waits for UC payments to ensure she has enough to pay her rent.

A second source of tension affects parents who are starting a new job or returning to work; namely, the payment in arrears of support towards their childcare costs and, in some cases, the delayed payment of this support. Not only does this disincentivise parents from working, it also causes considerable hardship. As shown in the following table, around two-fifths of households seeking help towards childcare costs, from Universal Credit, do not receive their full payment on time.

		Number of households				Percentage of households
		April 2019	May 2019	June 2019	July 2019	April 2019	May 2019	June 2019	July 2019
All new claims: total		136,432	121,660	146,057	137,521	100.0%	100.0%	100.0%	100.0%
of which:	Full payment on time	110,297	102,894	127,175	121,606	80.8%	84.6%	87.1%	88.4%
	Some payment on time	10,654	7,540	7,860	6,137	7.8%	6.2%	5.4%	4.5%
	No payment on time	15,479	11,231	11,022	9,779	11.3%	9.2%	7.5%	7.1%
of which:
Childcare entitlement		2,622	2,522	2,845	2,451	100.0%	100.0%	100.0%	100.0%
of which:	Full payment on time	1,343	1,516	1,838	1,707	51.1%	60.2%	64.6%	69.5%
	Some payment on time	880	750	807	583	33.5%	29.8%	28.4%	23.7%
	No payment on time	405	253	199	165	15.4%	10.0%	7.0%	6.7%

25 February 2020