Benefits change: What are the Universal Credit fears?

By Chris Mason
Political correspondent

Job centre
Image caption,
The overhaul hopes to make the benefits system simple and make it worthwhile to take up paid work

Seventy organisations, most of which will be involved in implementing the biggest overhaul of the benefits system since the creation of the welfare state, have told MPs of their concerns about the government's plans.

BBC Radio 4's The World This Weekend has been shown the written evidence submitted to the House of Commons Work and Pensions Committee, which is examining the progress being made towards the implementation of the Universal Credit in the autumn of 2013.

In over 500 pages of testimony, organisations representing councils, charities, trades unions, business groups, housing organisations and the government set out their outlook on the changes.

Universal Credit attempts to address what Work and Pensions Secretary Iain Duncan Smith sees as the two principal failings of the current benefits system: complexity and failing to make it worthwhile to take up paid work.

Many of those who have submitted evidence to the select committee of MPs regard themselves as key to making sure this huge change works.

Deep-seated worries

Many too, in evidence amounting to more than 200,000 words, acknowledge the government's motivations for reform are sound.

But two key themes emerge which suggest deep seated and broad based worries about the practicalities of making the idea work.

Firstly, a wide range of potential implications are raised both for prospective recipients of Universal Credit and those responsible for delivering it.

Secondly, there are serious concerns about getting the system up and running successfully in a year from now, by October 2013.

So what impact could the change to Universal Credit have?

'Digital by default'

The evidence shows there is widespread concern about managing Universal Credit online, the implications of it being paid monthly and being paid to one member of a household, and the gap when the current system is phased out and the new one starts.

Ministers are very keen to ensure that the new system should be "digital by default" - in other words, managed and run online.

"The new universal credit system risks causing difficulties to the 8.5 million people who have never used the internet and a further 14.5 million who have virtually no ICT skills," says Citizens Advice.

The public sector workers union Unison makes a similar point, as does the National Housing Federation, the umbrella group for homeless organisations, Homeless Link and Community Links, a charity based in east London, amongst others.

Concerns are raised too about paying Universal Credit monthly.

The Women's Budget Group, which describes itself as an "independent organisation bringing together individuals from academia, non-governmental organisations and trades unions to promote gender equality," also makes some observations.

It tells the MPs: "The government says monthly payment of Universal Credit mimics life in work.

"But many on low incomes in work have wages and/or benefits and tax credits paid more frequently, which matches common budgeting patterns for those on low incomes.

"Only one in ten of claimants think it would make their lives easier. Women are likely to be hit harder, as in low income families they tend to make more frequent purchases that will be squeezed as money is stretched."

There are concerns too that the payment of Universal Credit to one person in a household could, in some instances, upset the family dynamic: potentially putting that individual in a position of considerable power and influence.

Many of those who have submitted evidence are worried about how some people will cope when the changeover from the current benefits system to the Universal Credit takes place.

Image caption,
Work and Pensions Secretary Ian Duncan Smith wants to overcome problems in the benefits system

"What consideration has been given to providing grants to cover a shortfall when transitioning from fortnightly to monthly payments, rather than claimants having to rely on budgeting advances or 'pay-day loans' which need to be re-paid?" asks Gingerbread, the charity for single parents.

Manchester City Council raise a broader concern: the effects not just on people, but communities.

"We have concerns about the impacts on people but also on 'place' - either from large scale churn de-stabilising people and communities or reductions in income within areas with high concentrations of people currently on benefit."

Let's now turn to look at some of practical problems around making this change happen on time.

A wide range of organisations involved in meeting the government's deadline are clearly very worried about achieving it.

At the heart of the Universal Credit is what is known as the Real Time Information system. The aim is it will be much more responsive to people's changing circumstances.

It will require employers to report their employees' pay each time they are paid. In addition the self-employed will have to report their income every month instead of every year.

This will be a "significant and difficult burden, reliant on information from others", the Chartered Institute of Taxation tells the MPs.

'Real risk'

The success of the Universal Credit depends on the new computer system being completed "under extremely tight timelines," the employers' organisation, the CBI says.

"The new system's tight delivery timetable, coupled with low awareness among companies, is a risk to business and to the implementation of the Universal Credit."

"There is a real risk that the central government Universal Credit IT systems will not be ready on time," adds the Local Government Association, which represents councils.

So how does the government respond? Radio 4's The World This Weekend invited a minister to appear on the programme, but the invitation was declined.

In its evidence to the committee of MPs, the Department for Work and Pensions claims that "digital skills are a factor in around 72% of jobs", and so encouraging people to manage their Universal Credit online is sensible. It also saves a significant amount of money.

Advice will also be available, the department says, for those recipients who need help with managing their family budget.

"Rigorous, integrated IT testing has also commenced," it adds, pointing out it has "some of the best contingency arrangements in place across government" if things go wrong.

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