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CAS demands 'fundamental overhaul' of Universal Credit

Citizens Advice Scotland (CAS) is today (Thursday) calling for a ‘fundamental overhaul’ of Universal Credit.

In the week parliament returns after the Christmas recess, the charity has written to the Work and Pensions Secretary Thérèse Coffey and MPs outlining the struggles of people who have turned to the Citizens Advice network in Scotland for help.

The charity is outlining six key reforms to the benefit:

1. Reduce the five week wait for the first payment to no more than two weeks

2. Introduce a grant payment for the assessment period to replace the current advance payment loans that are pushing people into debt

3. End the digital by default application and claim maintenance process – ensure offline options are available

4. Extend the existing Work Allowances to all Universal Credit recipients, not just those with children or a limiting health condition

5. Increase the level of Work Allowances and reduce the Taper Rate to allow workers to keep more of what they earn

6. Review the way that DWP estimate earnings for the self-employed to reflect actual earnings

The work allowance means an eligible person can earn up to a certain amount of money a month without any financial impact on the amount they receive through Universal Credit.

This amount is £287 for people if they also receive housing support or £503 if they do not.

Currently only people who have children or have a limited capability to work because of a health condition or disability are eligible for a work allowance.

Single people or couples without dependents who do not have a limited capability to work are not eligible and currently lose 63 pence of their Universal Credit for every £1 they earn, from the very first pound.

This means a single person only has to earn around £505 after tax and National Insurance a month to be earning too much to be entitled to the Universal Credit standard allowance of £317.82.

CAS has previously highlighted that the five week waiting period for the first payment is driving some claimants into debt, and can be exacerbated by the Advance Payment system of loans rather than grants during the five week period.

The charity has also voiced concerns about the digital by default nature of Universal Credit, where people need to make the application and maintain their journal online.

Citizens Advice Scotland’s Social Justice spokesperson, Mhoraig Green, said:

“We need to see significant changes to the way the Universal Credit is designed and delivered to ensure it supports the people who need it.

“There are issues with how long people have to wait for a first payment, people being pushed into further debt, and the digital by default system which locks out people who don’t have the skills or means to apply and maintain their claim online. We need fundamental reforms to the system to address these issues.

“The new Government must also make ensure Universal Credit makes work pay. 

“A rising tide of people are working, yet remain in poverty. Our social security system should be a way to lift people out of poverty by supporting people into work and supplementing low paid work. Universal Credit is supposed to provide this support, but our evidence shows that in reality it penalises people who work.

“The upcoming budget must be used to increase existing work allowances as well as introducing a new work allowance for people not currently covered by the existing ones, so people can keep more of what they earn and have a chance of working their way out of poverty.”

Notes:

Examples of cases seen across the Citizens Advice network in Scotland which highlight the effects of Universal Credit on in-work poverty include:

A West of Scotland CAB reports of a client currently working 25 hours a week as a child minder. She is struggling to meet the cost of living and has used up her savings over the last two years. She is not entitled Universal Credit as she does not qualify for a work allowance but she is nearing retirement age and is unable to work more hours in a physically demanding job.

A North of Scotland CAB reports of a client who is a self-employed veteran and who was seeking advice about claiming Universal Credit. After checking, it became apparent that moving from legacy benefits onto Universal Credit would reduce the income of the veteran by £5,076.76 a year. The client reported he would most likely have to give up his business and try to gain full-time employment as due to the seasonal nature of his business he would struggle to have enough money to live on over winter. Moving to Universal Credit would also mean he and his family would lose out on income for five weeks with current payments of Child Tax Credit, Working Tax Credit and Housing Benefit (aside from a two-week run-on) immediately stopping.

Other examples of the barriers people have to overcome in order to claim Universal Credit include:

A South of Scotland CAB reports of a client who, after repaying their advance payment and a loan payment, only has £170 a month to live on for all food and priority bills. This person was seeking a referral to a foodbank as they were unable to afford food.

A CAB in the North of Scotland reports of assisting a client who had no internet access and had travelled 40 miles to get help to make a claim for Universal Credit. This person has no way of accessing the internet from home and no way of maintaining their claim online, leaving them open to sanction and potentially a closure of their claim.

An East of Scotland CAB reports of a client who was a lone parent working part-time and had to wait five weeks for an appointment at a Job Centre to verify their identity. The five-week wait for an appointment, coupled with the five-week wait for payment after a Universal Credit application is completed, meant a total wait of 10 weeks to receive a payment. This caused serious financial hardship.

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