Universal Credit causing ‘incredible hardship’ in Lancaster and Morecambe

Universal Credit delays are turning people to foodbanks, Citizens Advice has said
Universal Credit delays are turning people to foodbanks, Citizens Advice has said
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The new Universal Credit benefit system is causing “incredible hardship” for people in the Lancaster and Morecambe area.

New figures from the North Lancashire Citizens Advice Bureau (CAB) show a huge rise in people being forced into rent arrears or using food banks due to a six week delay in payments.

Universal Credit will be rolled out to all job centres by June 2018 but some people are already on the benefit

Universal Credit will be rolled out to all job centres by June 2018 but some people are already on the benefit

Lancaster City Council figures also show a big increase in rent arrears, with officers predicting a £500,000 defecit by the end of March 2018 due to non-payment of council housing rent.

Coun Andrew Warriner, cabinet member with responsibility for housing, said Universal Credit is forcing people into debt.

Helen Greatorex, chief officer of North Lancashire CAB, has joined calls for a pause in the roll-out of the new benefit system, in order for the government to understand how it is affecting claimants.

Mrs Greatorex said: “The main problem is the six week wait, mainly due to the problems with the system.

“It’s non-negotiable. People can’t make a claim in the first week, and then they’ve got to wait six weeks before the first payment.

“So they’re immediately in arrears, and it’s not back-dated either, so people have no choice.

“This results in rent arrears, council tax arrears, utilities arrears, people aren’t able to feed their children.

“The volume of food bank referrals we do has gone up significantly.

“The government say there are hardship payments that people can claim, which can help for a couple of weeks, but they don’t cover the whole six weeks.

“And the additional problem with that is that the hardship payments are then clawed back from the benefits.”

Mrs Greatorex said that the government’s own recommended minimum weekly amount to live on is £73 for a single person, but when the hardship repayments are taken out of that, people end up with less than the minimum amount they need to live on.

She said: “It’s causing incredible hardship.

“Our biggest enquiries used to be debt. Now it’s Universal Credit.

“The solution from our point of view is to pause the roll-out, and for the government to work with us and other organisations who can give a real picture of how it affects our clients.

“It’s a health and wellbeing issue.

“Not being able buy food or pay bills for six weeks has pretty major effect on people’s mental health.

“We support the principle of it in terms of simplifying the process, but it’s not acceptable that people are waiting so long.

“Our clients are living hand to mouth, often even if they’ve been working.

“The other issue here is about housing availability.

“I’m getting evidence from people saying that landlords are not prepared to take people on Universal Credit.”

This week, a Parliamentary vote brought by the Labour Party seeking for a pause in the roll-out won by 299 votes to zero.

All Conservative MPs, except one, abstained from the vote.

Although the vote was non-binding, speaker of the house John Bercow called on the government to respond.

David Morris, MP for Morecambe and Lunesdale, abstained from the vote, but said he agreed with the CAB that a 40 per cent hardship loan payback rate is too high and “can cause issues for claimants with further debt”.

He said: “I will be continuing to raise this point with the Secretary of State for Work and Pensions as I would like to see the figure lowered and the payback of the advanced payment loan stretched over a longer and more manageable period.”

But a spokesperson for Morecambe and Lunesdale Labour said: “David Morris is well aware of the harm that the implementation of Universal Credit in this constituency is doing.

“Demand on both the food bank and the various local food clubs has soared, with families forced to choose between feeding their children and having electricity and heating, and we have heard reports of parents going without food themselves.

“The system has categorically failed and it is incumbent on Mr Morris to stand up on behalf of his constituents before toeing the party line.

“He is neglecting the very real issues on his own doorstep.”

Meanwhile Lancaster City Council rent arrears jumped from £294,000 in the third quarter of its financial year 2015/2016, to £425,000 this year.

Coun Warriner said: “It is without doubt that welfare reforms are having a negative impact on people both nationally and locally.

“Here in the Lancaster district, the council is continuing to witness an increase in the numbers of tenants who are moving to Universal Credit sadly getting into rent arrears as they struggle to manage their personal finances.

“To improve recovery rates and having forecast that arrears may peak at £500K by the end of this financial year (March 31), the council has strengthened its income management methods and recruited a new manager to lead, manage and supervise its Income Management Team.

“The new post will help the council review and further improve our collection methods and recovery rates whilst helping to access specialist money management support for tenants.”

The Department for Work and Pensions says its latest data, from last month, indicates 81 per cent of new claimants were paid in full and on time at the end of their first assessment while 89 per cent received some payment.

Cases of non-payment, it said, were due to claimants either not signing paperwork, not passing identity checks or facing “verification issues,” such as providing details of their earnings, housing costs and childcare costs.

It said that the new benefit is encouraging more people into work.

Mrs Greatorex said that since July 2016 - when Universal Credit was rolled out in the Lancaster district - North Lancashire CAB had seen a 524 per cent increase in problem related enquiries.

She also said 80 per cent of foodbank referrals are now as a direct result of Universal Credit related problems up from 119 per quarter (post July 16) to 293 per quarter after its full digital roll out – a 246 per cent increase.

A Lancaster City Council report states:

Council Housing Rent Arrears – At the end of June the level of arrears was £425,000 (2015/16 Qtr 3 £294K) which is a significant increase on the previous year.  

As expected the impact of the Universal Credit introduction has had a detrimental impact on collection.

Officers predict the position will worsen and may peak at £500,000.

North Lancashire CAB have just released a report called ‘To Whose Credit’.

It includes testimonies from those surveyed about their experiece of Universal Credit.

It states that the distress caused to claimants by this immediate loss of income was mental as well as financial.

Respondents commented –

• I’m in debt now because of universal credit and I’ve never been in debt before

• Dealing with UC is making me ill with stress, and pushing me into debt because they can’t get payments right

• Incredibly difficult to wait for first payment and monthly pay. By the time my first payment came my bills were so high they were paid and all the money

was gone for another 28 days. 
• Previously paid fortnightly and then moved to monthly. Contacted Job Centre who refused request to remain on fortnightly payments. Resulted in a request

for a food bank voucher and struggling with gas & electricity payments

• It stresses me that I’m getting into debt

• Problems with switch from JSA to UC has left me with debts, particular problems over rent

It also includes Case Studies on claimants:

Case Studies

Client B has two dependent children and was in receipt of income support.

She is a council tenant and her partner had just moved in.

This change of circumstances meant that she had to make a joint claim for Universal credit, which would take at least five weeks to come through.

At the time of claim she had no money, no nappies and no formula milk. Her last income support payment was two and a half weeks previously for £80.

B would be able to ask for an advance payment of benefit at her initial universal credit interview but she had not been given a date for this yet.

Citizens Advice helped her make an application for a Care and Urgent Needs payment, and gave her a voucher for the local food bank.

Client C is a council tenant with one dependent child.

Her claim for Universal Credit was accepted but she is struggling to cope until she gets paid, which

could be 5-6 weeks. C wanted to know if there is any help she could get, apart from the food bank as she has no money for gas/electricity.

Her telephone has already been disconnected, but her rent is covered by the local authority.

C was advised that she could apply for a Universal Credit budgeting advance, which the Citizens Advice worker helped her to do. C asked for £400 which

was agreed, to be deducted from her benefit payments at £66.67 per month for 6 months.

C was also given a voucher for the food bank until her payment came through.

Client D is single and rents a room from a private landlord, paying rent of £75 per week including utility bills.

D put in a claim for UC (to include housing element) and received an advance payment of £196. Five weeks after he put in his claim he checked his UC journal and found that he was only going to get £75 per month for his rent. He has approx. £900 rent arrears and is still waiting for first UC payment.

He has no money for food.

The Citizens Advice worker rang UC and spoke to an adviser there, querying why the housing element was only £75 per month. The UC adviser said that a mistake had been made at their end and it would be put right and agreed that rent would be paid direct to the client’s landlord.

D was given a food voucher for the local food bank to help out until his first UC payment came through.

The full report will be available on the CAB’s website next week.