Universal Credit among worst examples of welfare reform ‘in the history of humankind’

Commons Work and Pensions Committee says Universal Credit application process should come with a health warning.



Universal Credit (UC) is damned as one of the worst examples of welfare reform “in the history of humankind”, with a new Commons committee report saying claimants are trapped with no way out of a system so complex it baffles even experienced benefit advisors.

Frank Field MP, chair of the Work and Pensions Committee, said the UC application page should come with a health warning in making a case for struggling or destitute claimants to be compensated – with so called managed migration seemingly not ready to happen any time soon.

The committee also warns the government to stop fighting decisions against UC through the courts, creating more uncertainty and hardship, and acknowledges the risk of suicide for disabled claimants.

Field said: “In the history of humankind, has there ever been an example of a government introducing a fundamental welfare reform and none of its employees being able to tell if it will leave people better or worse off?

“Hardly surprising that baffled and anxious claimants are finding themselves trapped in what the Department chillingly calls the “lobster pot” of Universal Credit, and with much less to live on as a result.

“The Universal Credit application page needs to come with a health warning, and anyone who gets inadvertently caught in DWP’s lobster pot should be compensated.”

Tomorrow (24th July) Secretary of State for Work and Pensions Amber Rudd is due before the committee to be questioned on UC – from the ‘migration’ pathways to issues with fraud and error.

In a series of reports over the past last two years, the committee has addressed some of the fundamental design flaws in UC itself.

This latest report begins to address the fundamental structural flaws in the policy systems that mean even the transition from existing benefits to UC is riven with problems and difficulties that have effectively stopped the reform in its tracks.

Yet through ‘natural migration’, claimants continue to find themselves with no option but to claim the benefit.

In many cases, claimants see their income drop and face what the Committee has called the “impossible choice between hardship now or hardship later” in the DWP’s up-front debt load “solution” to the deep problems of the initial wait for payment.

There is, the report says, a key issue in understanding when existing benefit claimants will need to naturally migrate to UC, which is seen as so complex it baffles even experienced benefit advisers.

The Committee is calling on the DWP to work with stakeholders to develop clear and comprehensive guidance on the circumstances that will lead an existing benefit claimant to be forced to reapply for their entire benefit entitlement in the form of UC.

Referenced in the report is the committee repeatedly asking for the DWP to provide a complete list of the ‘changes of circumstance’ that will trigger ‘natural migration’.

In the absence of this vital information, there is, the report says, no clarity over the factors that will cause the move to UC.

But the Committee notes among the most problematic or even “cruel” are:

  • A disabled person who gets the opportunity to move to a better adapted house, but in a different local authority area, will find themselves shunted onto UC through natural migration

While the ‘Gateway’ barrier has been introduced to stop this happening to some vulnerable, disabled claimants, the Court-ordered compensation to people who fell through this particular crack in the system is tied up in the regulations for the government’s attempt at a pilot of ‘managed migration’.

Committee member Ruth George had to ask for evidence in Parliament if the government was trying to “blackmail” MPs into passing the managed migration regulations.

Those regulations have yet to be brought to Parliament for a decision, however, and with three sitting days left, and deep concerns on all sides of the House still unassuaged, the report says it seems apparent the pilot of managed migration – the ‘next phase’ of UC – will not be happening any time soon.

Field said: “Last year, the government belatedly accepted that it had been wrong to push some of the country’s most vulnerable citizens onto UC, slashing their incomes in the process.

“But more than a year on, about 10,000 people are still waiting for compensation – why won’t the government stop fighting this all the way through the courts and just get on with giving disabled people the money they are owed?”

  • A person who is bereaved and loses their partner is classed as having a change in circumstance – which means they must immediately claim UC at a time of considerable grief and distress

The report regards the rules under UC for bereaved people as much less generous than their equivalents in the legacy system.

Recently bereaved claimants may also no longer be exempt from housing restrictions, such as the ‘bedroom tax’, after the death of their partner. They are therefore expected to immediately change their living arrangements at the peak of their grief to avoid plunging into debt.

The report says claimants who have lost their partner should be able to remain on legacy benefits for a grace period of one year.

Additional payments of two weeks of Housing Benefit, known as a ‘run-on’, are already available to claimants who migrate naturally, and the DWP has also announced run-ons of income-related Jobseeker’s Allowance, Employment Support Allowance, and Income Support.

But the committee notes these will not be available until 2020 because the Department cannot make the necessary changes to its IT systems.

The report urges the DWP to move away from ‘Computer says no’ and look again at the options to remove the five-week wait.

Until then, the report says, the DWP must find a way to make the run-ons available by Autumn 2019.

The report says claimants moved onto UC with no return to legacy benefits: claimants are trapped in the ‘Lobster Pot’, potentially with substantially less income.

If a claimant complains and the Department finds that it has misadvised them, they receive compensation.

But, given the sprawling complexity of the “simplified” six-in-one benefit, and the dearth of information about the process and its outcome, the committee recommends the DWP signpost claimants to an external charity, in case they wish to attempt to calculate what their new income under UC might be.

But the committee acknowledges this is not enough, with claimants needing protection whether they move to UC prematurely by their own mistake or by following incorrect advice from DWP staff or other organisations.

The report says the DWP should provide full compensation to all claimants who have lost out financially because they have moved to UC prematurely.

Cuts to disability entitlements mean that some disabled adults and children are among the groups most likely to see their income fall when they move to UC via natural migration.

The committee took evidence of many disabled claimants and those with long-term health conditions losing out – as do some disabled children.

In such cases, the government should provide payments to meet the shortfall in income for all disabled claimants who move to UC through natural migration, the report says.

Claimants waiting for appeal decisions on their legacy benefits are being asked to take what the committee calls a “bafflingly complex gamble” with their financial future, and if their appeal is successful, they are effectively penalised by the DWP because of its own incorrect decisions.

The Committee says the DWP should leave claimants on legacy benefits while they await the outcome of their appeal, and pay them the money they would be entitled to under JSA.

A failure to correctly transfer decisions on a claimant’s capability for work is identified in the report as having “drastic consequences” for disabled claimants, who not only can they find themselves with less money to live on, but subject to harsher conditionality rules, with the expectation that they seek work or face sanctions.

To the committee, this is particularly dangerous for this group of claimants, given that in many cases the DWP has assessed that engaging with Jobcentres can put them at risk of self-harm or even suicide.

The Committee says it cannot simply accept on trust DWP assurances that this is not a “systemic” issue.

Instead, the report recommends the DWP explore ways to make the carry-over of WCA decisions from legacy benefits to UC a more automated process.

If it cannot do this, the Committee wants regular reports from the DWP on the number of cases where this is not happening on time.

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