The DWP has only just released research published in 2017 revealing tax credit claimants experienced “real financial problems” after they signed on to Universal Credit (UC) – ahead of the politically toxic rollout of the reform.
That research – the result of a joint DWP and HMRC study – examined how tax credit claimants coped with the move and found 60% of those who said they struggled to pay bills said their difficulties began when they moved on to the new benefit.
Titled The transition from tax credits to Universal Credit: qualitative and quantitative research with claimants, the report was released yesterday (4th April) but is dated November 2017, with the research carried out between October 2016 and July 2017 as the rollout was being prepared.
More than half of claimants reported that the routine six-week wait for a first payment took them by surprise, and nearly half of those who were expecting a delay underestimated by a third how long the wait would be.
About half of those surveyed did not have sufficient savings to tide them over the six weeks, the study found, and this group struggled especially.
Some claimants experiencing “considerable stress” after payment delays meant they had to wait up to three months to get their money.
“Overall, 25% said they were having real financial problems and falling behind with many bills and commitments, 13% said they were falling behind with some commitments, and 13% said they were keeping up but, it felt a constant struggle to do so,” the report found.
At the time the report was finalised, David Gauke was work and pensions secretary and facing demands to pause the UC rollout to assess the impact of the six-week wait.
It was over this that Gauke put on his infamous ‘they’re trying wreck it’ performance in the Commons as a response repeated challenges from the opposition benches over the failings of the ‘reform’.
Gauke went ahead with the rollout and told the 2017 Tory conference that UC was working and announced changes to head off a festering backbench revolt – further changes followed in an attempt to mitigate waiting times.
At the time, Frank Field, chair of the commons work and pensions committee, accused the DWP of “withholding bad news”, claiming Gauke only gave the go-ahead to UC because DWP officials “had withheld the true scale of the problems”.
Now, Margaret Greenwood MP, shadow work and pensions secretary, has asked why the government is just releasing the findings.
“The government must take notice of its own research and stop Universal Credit as a matter of urgency,” she said.
Gillian Guy, chief executive of Citizens Advice, said: “This isn’t a surprise to us, despite the data being a few years old. This tallies with experiences of the people we’ve helped who have struggled financially when they’ve been moved onto Universal Credit.
“While the government has made some changes to support people moving onto universal credit since this research, these do not go far enough. Half of the people we help while waiting for their initial payment are unable to keep up with bills or rent.”
The DWP referred comment to HMRC, which cited ‘improvements’ to UC since January 2018, allowing claimants an advance of up to 100% of their estimated monthly entitlement while they wait for their first payment.
In the report, awareness of UC was found to be low prior to making a claim (45% had never heard of it before they made a claim).
Over half (56%) of claimants felt that they received too little information from HMRC and wanted more.
Prior awareness of overpayments was low. Three quarters (75%) of those with tax credit overpayments said they discovered they had an overpayment after their UC claim had started.
The research, which focused solely on those who had a tax credit overpayment, found that while some claimants were aware they had an overpayment few understood that this debt would be recovered via deductions from their UC award.
Over half (57%) of claimants were aware that their tax credits would stop when they claimed UC.
The research found that sometimes customers were unclear about why their tax credit claim had closed.
To the report this is “important”, as those unaware of such information were more likely to contact both HMRC and DWP (57% vs. 48% of those aware).
Less than half (42%) of claimants were aware there would be a gap between their tax credits stopping and their first UC payment being made.
A fifth of claimants (21%) said they were keeping up with all bills and commitments with no difficulty, and a further quarter (27%) said they were keeping up but it could be a struggle.
Over a third were “having financial difficulties” – classified as those falling behind with some, or many, bills and commitments.
Among this group, around six in 10 (62%) said their difficulties started in the same month or after they began claiming UC.
Nearly four in 10 (38%) said their financial difficulties had begun prior to the date they signed their Claimant Commitment.
The report acknowledges an overall lack of awareness and a perceived lack of clear information about UC and the migration process – with the majority of claimants contacting HMRC or DWP during their application process (87%), with around half (52%) contacting both departments.
Lack of clear information was cited as one of the main reasons for dissatisfaction with the service (34%).
The research also found that some claimants felt the letters lacked specific information, such as a UC start date, and suggested some of the most common reasons that claimants contacted HMRC and DWP was to gain specific information, such as when their UC payments would start and how much they would be paid. Some found the letters overwhelming and “full of jargon”.