Ipswich Unemployed Action.

Campaigning for Unemployed Rights.

Posts Tagged ‘Debt

Universal Credit: Costs More Than Previous System and makes 60,000 Families Worse off.

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Resolution Foundation research suggests 600,000 families could be worse off

Universal credit, the government’s flagship welfare policy, will be more expensive than the system it replaces, according to a new report.

The rollout of the reformed system, which brings six benefits into one, has been hampered by delays amid widespread concern that the changes could force people into poverty, while there have also been reports that universal credit, which has undergone phased introductions across the UK, has increased reliance on food banks.

In the autumn budget the chancellor, Philip Hammond, announced that an extra £1.7bn would be injected into universal credit, which combined with the projected £3.2bn higher benefit take-up would make it more expensive than the legacy system it replaces, the study states.

The Resolution Foundation says.

This briefing note focuses on the implications of recent changes to Universal Credit (UC) – in particular the £1,000 increase in work allowances announced in Budget 2018 – for the number of winners and losers from the switch to this new benefit system, for UC’s generosity and for its impact on work incentives.

David Finch, Laura Gardiner.

Key findings

  • The Budget 2018 work allowance increase means that the number of working families that gain from the switch to UC increases by 200,000 – from 2.2 million families previously to 2.4 million families now. Among working families with children, the number (1.5 million) expected to be better off under UC now matches the number (1.5 million) expected to be worse off.
  • Relative to the pre-Summer Budget 2015 UC system, the work allowance and taper changes of recent years have restored or improved incentives to enter work at low earnings for renting single parents and the first earner in renting couples with children; and reduced incentives to enter work at low earnings for home-owning parents who are either single or first earners in couples, and non-parents without disabilities.
  • Single parents and second earners in couples with children – both very likely to be women – are most responsive to work incentives. As such, it is a concern that UC continues to incentivise single parents (particularly renters) to reduce working hours below the 16 hours backstop present in the tax credits system. It also still fails to sufficiently incentivise work for second-earner parents.
  • One of UC’s major advantages is that it gets rid of the very highest rates at which benefits are withdrawn in the existing system, which can leave people with less than 10p for each additional £1 earned. However, the fact that taxpayers on UC keep just 25p of each additional £1 earned (even less when paying for childcare costs) means that challenges remain.

Recommendations

  • We suggest boosting single parent work allowances, at a minimum, to the equivalent of 15 hours a week on the wage floor, and introducing a second earner work allowance for those in couples with children.
  • Financial incentives to progress in work should be boosted by gradually lowering the taper rate. In addition, planned progression pilots should test a far more ambitious system of practical support to help low-paid workers progress and secure better-quality roles.

Another day, yet another story:

Universal credit: Rent arrears double for benefit claimants

BBC.

Council tenants on universal credit have on average more than double the rent arrears of those still on housing benefit, a BBC investigation has found.

In Flintshire, north Wales, one of the first counties to test the new payment, the council says rent arrears have gone up by £1m.

One claimant there said a mistake left him with just £29 a month to live on.

But the UK government said it had listened to concerns and universal credit was working well.

The BBC contacted every local authority in the UK that has council homes about their arrears. The results from the 129 councils that responded showed the average amount owed by tenants claiming universal credit across the UK is £662.56. For those still on housing benefit it is £262.50

Flintshire council said this week that tenants on universal credit in the county owe on average four times as much rent as those on the old benefits. At times it has been even higher; in September it was six times as much.

In the 18 months since universal credit was introduced in Flintshire, the council’s rent arrears have increased by £1m, something officials say is largely due to the new benefit.

Ipswich:

Ipswich & District Trades Union Council

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Open meeting on the Universal Credit Crisis with key speaker Mark Page, a regional officer in the PCS with a background in the DWP.

Hosted by Ipswich & District Trades Union Council, all welcome.

Mark Page, Regional Officer PCS  will speak on the UNIVERSAL CREDIT CRISIS.

Every day another horror story about Universal Credit hits the news headlines, how and when will it end?Following debate at Congress, the TUC’s policy is for Universal Credit to be stopped and scrapped. What should replace it?

7.30pm Wed Nov 21st 2018 Unite Office, 13, Arcade St, Ipswich

This meeting is part of the build up to Unite Community’s National Day of Action on Universal Credit on Sat Dec 1st 2018.

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Written by Andrew Coates

November 12, 2018 at 11:18 am

Universal Credit Leaves Families in Debt.

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Protests as Universal Credit is rolled out in Clacton (6th August)

One of the first things you noticed in the changing High Street of the last decade was the invasion of loan companies, and pawn brokers and companies like BrightHouse,

Got no money but need a new TV? No problem. BrightHouse will sell you one in instalments… for a huge mark-up

Then there’s the Wonga, QuickQuid, and licenced loan sharks ads all over the telly.

Debt, the cause and the result of this has become a major problem.

But there’s nothing that Universal Credit can’t make worse.

Universal credit flaws leaving families in debt, campaign group says

Low-income working families are losing hundreds of pounds each year – and being wrongly denied free healthcare entitlements – because of flaws in the way universal credit is designed, campaigners say.

The Child Poverty Action Group (CPAG ) said arbitrary rules built in to the way universal credit is calculated leave some families unable to predict how much they will be paid each month, leaving households in debt and unable to budget.

It can lead to claimants being wrongly benefit-capped – a penalty designed to “incentivise” jobless or low-earning households by severely limiting their benefits – because the system fails to spot they are working and earning enough.

In other instances, the problem means claimants doing the same job and earning identical salaries can end up being paid different amounts of universal credit simply because their respective claims begin on different days of the month.

The complication, which occurs when pay dates fall close to the start of universal credit assessment periods, can result in claimants who are parents or disabled losing up to £258 of work allowance each month, CPAG has estimated.

The charity has called for universal credit to be halted in order to fix the problem before the benefit is extended to over two million people – including many families who are currently in receipt of working tax credits – from July 2019.

It says erratic payments have left families stressed and in hardship: “Claimants are often left flummoxed by how much – or how little – universal credit they will receive from one month to the next,” said the CPAG chief executive, Alison Garnham.

The full report is:

Rough justice: problems with monthly assessment of pay and circumstances in universal credit, and what can be done about them

The lengthy press release from the Child Poverty Action Group says that it’s people working who are hit hard,

Universal credit assessment system is leaving claimants out of pocket

Working people claiming universal credit are having their benefits capped when they shouldn’t be, and losing the effects of ‘work allowances’ worth up to £258 per month simply because of the dates on which their paydays and universal credit ‘assessment periods’ happen to fall, new evidence from Child Poverty Action Group (CPAG) shows. Last month the Work and Pensions Secretary acknowledged the need to look at “ … payment cycles for those in work.” (3)

In the worst cases workers are losing hundreds of pounds each year simply because their paydays clash with the monthly ‘assessment periods’ in universal credit (UC). Far from offering much-vaunted simplicity, universal credit rules leave many workers unable to predict what their payments will be from one month to the next. People who happen to move house at the ‘wrong’ point in their assessment period can also lose hundreds of pounds in help with rent.

One in 20 cases coming in to the charity’s Early Warning System – which gathers case evidence from welfare rights advisers across the UK – indicates a problem with the monthly assessment system in UC. ​

Universal credit assessment periods run for a calendar month, starting from the date Universal Credit is awarded. At the end of each month, claimants’ circumstances and income are assessed to determine their entitlement to UC, with payment made a week later in arrears. But where a claimant’s monthly payday is on or close to the first day of their assessment period and they are paid a day or two early some months, because their normal payday would fall on a weekend or bank holiday, they are then recorded as having had two paydays in one assessment period and none in the one after.

Two pay cheques in one assessment period can leave claimants facing unexpectedly low universal credit awards as well as losing the effect of one month’s work allowance (see below). Claimants can even lose help with prescription charges or travel costs for NHS treatment because when paid twice they appear to earn more than they do. And if they appear to have no earnings in the following assessment period – because they received two pay cheques in the preceding one – then rather than seeing their universal credit increase to compensate for this they may find that they are in fact subject to the benefit cap (which was designed to limit how much support is paid to people out of work or with very low earnings) so their support for that month is reduced too. Had they simply received one paycheque in each assessment period they would have a consistent UC award and would be recognised as earning enough not to face the benefit cap.

Claimants whose assessment period start-date and payday are both close to the end of the month are especially likely to miss out, as bank holidays are often in the last days of the month.

A worker paid on the last working day of each month in 2018, with assessm​ent periods dated 30th – 29th of the month will have:

§ 6 assessment periods with one payday

§ 3 assessment periods with two paydays

§ 3 assessment periods with no paydays.

People who are paid weekly, fortnightly or four-weekly will also have different numbers of paydays in different assessment periods over the course of a year, which makes budgeting challenging and also means that they may be eligible for passported help with health costs in some months but not others, or may be benefit capped in some months but not others, when their pay has not in fact changed at all.

For couples where both partners work on different pay cycles, the variability of their UC award month to month can make budgeting almost impossible – see case study Katie and Luke (page 9 of full briefing).

There is a lot more.

They conclude:

Commenting on the findings from CPAG’s Early Warning System, the charity’s Chief Executive Alison Garnham said:

“Universal Credit isn’t working for working people. Our Early Warning System shows​ claimants are often left flummoxed by how much – or how little – universal credit they will receive from one month to the next.​ But we believe most of the problems created by the monthly assessment system can be fixed relatively easily if the political will is there. The mass migration of families on to universal credit should not begin until these fundamental problems are resolved.”

And:  Child Poverty Action Group is taking legal action on the rigidity of assessment periods

Just to remind people where this ends:

Written by Andrew Coates

August 8, 2018 at 12:17 pm

Universal Credit is Creating Debt – Citizens’ Advice.

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Universal credit forces people into debt because application process is so complicated, says charity reports Jessica Morgan in the Independent.

Many claimants have fallen into debt after not receiving their first full payment on time.

Universal credit is forcing people into debt because the applications process is so complex, a new study has found.

Citizens Advice has revealed more than a third of people supported by the charity were left struggling to provide the evidence needed to complete their claim.

And as a result, a quarter of claimants fall into debt because they haven’t received their first full payment on time.

Many claimants, who must wait at least five weeks for the first payment, struggle to provide evidence for health conditions, childcare and housing and are stumped by multiple deadlines.

The charity is now calling on the government to simplify the process.

….

The Citizens Advice’s study comes after service centre workers lifted the lid on the “fundamentally broken” universal credit IT system, which was causing a surge in delayed payments.

Whistle-blowers have spoken out about the glitches and errors that the system has, which repeatedly leads to benefits being delayed for weeks, or wrongly slashed, The Guardian reported.

One said: “The IT system on which universal credit is built is so fundamentally broken and poorly designed that it guarantees severe problems with claims.”

They claimed the systems were overly complex, prone to breaking, and any errors were slow to fix.

“In practical terms, it is not working the way it was intended and it is having an actively harmful effect on a huge number of claimants,” they added.

This their Press Release:

Universal Credit claims falter due to complicated application process and lack of support

More than a third of people helped by Citizens Advice struggle to provide the evidence needed to complete their Universal Credit claim, new research from the charity finds.

With government data showing late Universal Credit payments are usually due to challenges submitting evidence, Citizens Advice asked people who came to the charity for help how difficult it was to meet these requirements. Of the people helped who qualify for extra costs under Universal Credit:

  • 48% found it difficult to provide evidence for health conditions

  • 40% found found it difficult to provide evidence for housing

  • 35% found it difficult to provide evidence for childcare

The charity also found that people receiving their first full payment late stood a higher chance of getting into greater debt, or falling into it. When people didn’t receive their first Universal Credit payment on time, their chances of being in debt increased by a quarter (23%). They were also 60% more likely to borrow money from a lender to help tide them over.

One mum-of-two had to wait an extra three weeks for her first full Universal Credit payment, which covered her rent. She was not told to bring her tenancy agreement to her Jobcentre appointment and struggled to get another appointment quickly. In the meantime, she went to a foodbank and borrowed money from friends and family members to tide her over.

As people must wait 5 weeks before receiving their first Universal Credit payment, their finances are often already stretched. This is particularly problematic if they have no income beyond an Advance Payment, which they are required to apply for. Any delays to this mandatory wait can then be more acute.

In total there are 10 stages to making a Universal Credit claim, many of which are time sensitive. If a deadline is missed, a claim may have to be started again. Some people are finding the process so complex that 1 in 4 people who were helped by Citizens Advice spent more than a week completing their claim.

Despite the demands of making a claim for Universal Credit, there is inconsistent support available with many not even aware it exists. Of those who took part in the research, 45% said they did not know about the support on offer but would have taken it up if they had been.

Citizens Advice is calling on the government to simplify the claims process, make it easier to provide evidence for extras costs and make sure adequate support is on offer. The charity says these improvements must be urgently put in place as roll out of the new benefit continues to increase.

Citizens Advice is calling on the government to:

  • Introduce an automatic payment for those who don’t get paid on time to help cover their immediate costs

  • Extend the support on offer so people can get help when making and completing a claim

  • Make it easier for people to provide evidence online at the start of making a claim

Gillian Guy, Chief Executive of Citizens Advice, said:

“While Universal Credit is working for the majority of people, our evidence shows a significant minority are struggling to navigate the system. With people already having to wait 5 weeks as a matter of course for their first payment, any further delays risk jeopardising people’s financial security.

“Last year the government showed it was listening by taking important steps to improve Universal Credit. Those measures are starting to have an impact, but more needs to be done. Top of the government’s list should be simplifying the process and making sure adequate support is in place so that claims can be completed as quickly as possible.”

Citizens’ Advice relies on this research:

Making a Universal Credit Claim

23 July 2018

● DWP evidence shows currently 1 in 6 new claimants aren’t paid in full on time, and for many this is because they are struggling to provide the
right evidence.
● 40% of people Citizens Advice helps find it difficult to evidence their housing costs.
● 43% of Universal Credit claimants surveyed by DWP said they needed more help setting up their claim.
● 45% of Universal Credit claimants we help didn’t know support was available when applying for the benefit, but would have used it if they had.
● 1 in 4 of the people Citizens Advice helps take more than a week to make their claim, while DWP information for claimants says it should take up
to an hour.
●Universal Credit claimants we help who are paid late are 23% more likely to get into debt than claimants who aren’t.

(Too many people struggle to make a Universal Credit claim – summary [ 470 kb]

Making a Universal Credit Claim – full report [ 0.64 mb] )

In 2017 they stated:

Fixing Universal Credit.

We believe that roll-out should be paused while DWP addresses a number of signicant issues with Universal Credit. At the moment,  our research suggests that nearly a third of the people we help have to make more than 10 calls to the UC helpline to sort out their UC, over a third are waiting more than 6 weeks for their first payment of benefit and half are having to borrow money to cope with the initial wait for payment. The move to UC is causing significant financial challenges – our UC clients are nearly one and a half times as likely to seek advice on debt issues as those on other benefits.

Action is needed to reduce the waiting period for first payment, improve support for people receiving UC, and help people achieve financial stability once they are on the benefit.

Amongst the main recommendations was to call for a “pause” in the roll-out (ignored), reducing the waiting time (done: from 6 to 5 weeks…), and creating systems of “support” .

 

Written by Andrew Coates

July 25, 2018 at 10:46 am

Extreme Debt Rise and Universal Credit Delays,

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Image result for debt

I have just been talking about debt to some friends.

One, unemployed, is a very bad situation because his debts.

Apparently this is becoming a widespread problem.

I say “becoming” but since the opening of credit lines to nearly everybody, not to mention the legalisation of loan sharks (watch half the digital channels with all the loan ads..), not to mention the fact that everything seems to designed you to debt (Council Tax, and think of all the student loans), it’s been swelling and growing no end.

Or Brighthouse (they have  big shop in Carr Street Ipswich) the “Rent-to-own retail chain” for houshold goods.

Or, well everybody knows they pay day lenders, the pawn shops, and the rest of the crew.

So this story comes as no surprise.

1.2 million low-income households are in ‘extreme problem debt’, says TUC.

James Richards on Public Finance reported a few days ago:

The number of UK families living in extreme debt has risen to more than one million due to stagnant wage growth, including in the public sector, research published by the Trades Union Congress and Unison has found.

According to the report, total unsecured debt between 2012 and 2015 – from credit cards, bank loans, payday loans and student loans – rose by £48bn and now stands at £353bn.

Around 3.2 million, or one in eight, households are living in ‘problem debt’. This is defined as paying out more than 25% of gross household income on unsecured debt repayment.

Meanwhile, 1.6 million households, one in sixteen, are in ‘extreme problem debt’ – those paying out more than 40% of income on unsecured debt repayments. The report estimates that 1.2 million households in this bracket have an income of less than £30,000 per year, which is below the low-income threshold.

For low-income households in employment, extreme problem debt is growing fast. In 2015, 9% this group were in extreme problem debt, which is nearly double the figure of 5% from 2015.

The report cites recent Bank of England figures that show consumer credit, which is the main constituent of unsecured debt, is now growing at an annual rate of more than 10% – the highest rate in a decade.

TUC general secretary Frances O’Grady stressed that households could not continue to rely on credit cards and loans survive. But because wages per week were worth £40 less than before the 2008 crash, many families had little choice, she said.

This story also appeared a couple of days ago,

Delays in government’s flagship welfare reform has caused debt, rent arrears and health problems, says Labour MP Frank Field

Huge built-in delays in the processing of universal credit benefit claims have turned the government’s flagship welfare reform into a “recruiting sergeant for food banks”, according to Labour MP Frank Field.

Field, the chair of the Commons work and pensions select committee, said the minimum six-week payment period faced by new UC claimants led to reliance on emergency food parcels, triggered debt and rent arrears, and caused health problems.

Field has written to the work and pensions secretary, Damian Green, asking him to cut the lengthy and stressful wait for payments faced by penniless claimants.

“This is an unbelievably long time for people at the bottom to survive with no money, and I have received evidence to suggest people have been exposed to hunger and homelessness during this 42-day period,” he wrote.

The lengthy wait for UC payments was reported as the main cause of referral for one in nine of the 79 cases presenting at a food bank in his local Birkenhead, Merseyside, constituency in recent weeks, the veteran poverty campaigner said.

The Department for Work and Pensions responded that it was misleading of Field to draw wider conclusions “from the anecdotal evidence of just eight people”. It said: “The reasons people use food banks are complex.”

However, Chris Mould, the chair of the Trussell trust food bank network, said the charity’s local managers were reporting UC payment delays as a big cause of hardship for claimants: “For someone with no income the lengthy 42-day wait will leave them struggling to afford to eat and, for those without friends, family or other support networks to help, it can leave them desperate.

“We wholeheartedly support the recommendation that this waiting time be reduced.”

I leave out the DWP reply, following company policy of stout denial.

Debt, crippling debt, that’s the kind of world we’re having to live in.

 

Written by Andrew Coates

August 27, 2016 at 3:18 pm