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Eight things IDS didn’t tell you about Universal Credit

One: Universal Credit (UC) was officially launched, on a very small scale, at the end of last month in Ashton-under-Lyne. It merges several benefits and tax credits into 1 monthly pay-out, not let it be noted weekly. IDS is keen to tell the public that 3 million people will gain, though for some reason he forgets to add that on the government’s own impact assessment 2.8 million people will lose. Somehow he’s also forgotten to tell you that the cuts have taken place even before UC starts – cuts to housing benefit, the bedroom tax, cuts to working tax credit and child tax credit, and the replacement of Council Tax with local schemes that often involve people losing £200 a year. That’s just for starters.

Two:  Applications for UC can only be made online, and it takes 20-40 minutes to complete the online form. But according to the Office of National Statistics 7.6 million people have never used the internet and in some rural areas people who can use the internet don’t have access to broadband. Also the NAO says only 37% of people are happy to provide personal details on government websites.

Three:  Households that earn £247 or less a week will see a fall in real income in 2015 because of the changes to benefits and lone parents will be worse off whatever their circumstances. Low earners with a working partner will see their marginal tax rate rise (because UC has a higher withdrawal rate than tax credits do) from 73% as it is now to 76.2% – yet even the very richest in society only have a marginal tax rate of 40%.

Four:  People will be driven to use payday lenders, or even worse loan sharks, because unlike current benefits UC is paid monthly in arrears, so people will have no money coming in for the first 5 weeks after they have successfully made a claim. At present half those earning under £10,000 a year are paid more frequently than once a month.

Five:  Given that UC applications are online only, people will have to rely on help via the telephone. The UC helpline – 0845-600-0723 – costs up to 10p a minute from a landline and up to 41p a minute from a mobile. Between April-October 2012 calls to 0845 numbers lasted 7 minutes and 42 seconds, so an average call to a DWP 0845 number would cost over £3.

Six:  The amount you receive in UC will depend on the data submitted to HMRC by the employer. So you lose out if your employer provides the wrong information or at the wrong time.

Seven:  Council and Housing Association tenants are denied the choice to have their rent paid direct to the landlord. That will be less efficient, less cost-effective, and likely to increase rent arrears.

Eight:  To get UC you will have to sign a ‘claimant commitment’ which sets out what you are expected to do in perparing for work, looking for work or getting work that pays 35 times the minimum wage, i.e. at least £216.65 a week. It will also set out the consequences if you fail to do what is required, and because UC is a household benefit what one person does or does not do will affect all the other members of the household.

One Comment

  1. Mark Wood says:

    Good clear information. But still wondering if the people presently claiming get the time reset once they move to universal credit, Does that mean that millions of people are facing this five weeks wait as they transfer from the old system to the new? if so, that will cause ructions in our communities. As you state, the benefits have just been reduced, let me clarify a little.

    Before the changes you got your housing costs paid in full if you were lucky enough to be in what is left of our social housing system, you got paid £71 per week to cover everything else. Now the changes in the way your housing costs are paid means that you now are left with about £50 per week. As rents are high everywhere the nett loss is far higher than the 14% cut the media talk about as it is 14% of the housing cost not the benefit you receive.

    So the current situation is this: People that are already struggling are having to deal with massive cuts, this at a time when everything you need to sustain life is rising far faster than the inflation rate. This is hard and is already creating social disruption. If what you say is that the new U.C. will further add to the burden of having to wait a compulsory five week delay in getting what you are entitled to, then expect a major disaster down the road as this evil scheme is introduced.

    What surprises me is that politicians have not seen the politicising effect these changes have had already on the people effected by these changes. I really think that this five week loss will accelerate this effect.

    At best we will see crime and a feeling of being an outcast and disregarded rise to levels that make predictions unpredictable, it may actually be the catalyst that creates the critical mass level of disenchantment that history shows can lead to the unexpected. Desperate people will act in a desperate manner.

    This desperation will not stay in the communities of those effected by the introduction of U.C. This desperation will touch all of us as millions of people try to survive this calamity about to be inflicted on the already suffering poor.

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