Shadow Chancellor John McDonnell has appealed for MPs of all parties to vote down Philip Hammond’s Budget when he announces it tomorrow (October 29) – if it fails to stop Universal Credit forcing people into poverty.
Mr McDonnell’s words came on the day The Observer published a report exposing how Universal Credit is forcing people out of their homes.
“The rollout of universal credit and freezes to local housing allowance rates put even basic accommodation beyond the means of many. One shelter said universal credit was a factor in a third of its clients ending up in its care,” the report states.
“Last week, the Commons public accounts committee said universal credit was responsible for increased debt, rent arrears and food bank use.
“But it has also emerged that it is a significant contributor to both “invisible” homelessness – such as people “sofa-surfing” or living in emergency accommodation – and rough sleeping.”
It adds that Tory and DUP rebels threatening to force the government into a rethink over universal credit claimed that they had secured a £1bn injection for the programme.
Several Conservatives have spoken out over the scandal of Universal Credit, but it is worth remembering that there are NO Tory rebels. Conservatives always fall back into line, claiming they have secured the means to solve crises – and once they have voted for the government, the promised measures magically disappear.
Asked about the issue on the BBC’s Marr Show, Mr Hammond said he had used previous Budgets to put money into the project, adding: “When we see things that need addressing, we address them.”
Mr McDonnell was not impressed. Speaking before the Hammond interview, he told Andrew Marr:
I am calling on other parties and members of other parties in Parliament to vote down the budget if the Chancellor refuses to halt the roll out of universal credit pic.twitter.com/oIo4xb9zev
— John McDonnell MP (@johnmcdonnellMP) October 28, 2018
And he commented on the interview afterwards to Sky’s Sophy Ridge:
Other commentators pointed out that Mr Hammond didn’t seem to understand how Universal Credit works, who it affects or how it affects them. He seemed to think it only affects people who are out of work, and said he hoped they would not be worse off with the benefit.
We don't need the chancellor to 'hope' people won't be worse off under Universal Credit. We need him to know for sure.
— Momentum 🌹 (@PeoplesMomentum) October 28, 2018
— Debbie Abrahams MP (@Debbie_abrahams) October 28, 2018
Recent news stories have shown that:
- More than 35,000 families have turned to “baby banks” – charities that work in the same way as food banks – to feed and clothe their children. Users include “families affected by the Universal Credit fiasco”.
- More than 14 million people in the UK are living in poverty, including seven million in “persistent” poverty that has lasted more than four years. A further 2.5 million are in danger of falling below the poverty line.
- Children are now routinely rooting through bins in search of clothes and supplies for their families, while Universal Credit has left some people suicidal and forced others into sex work.
- A report by Citizens Advice has shown that Universal Credit renders disabled people £300 a month worse-off. That’s a loss of £3,600 per year.
- Even people with terminal cancer are being forced to wait five weeks for their first Universal Credit payment, putting them at risk of hardship, stress and anxiety at a time in their lives when they should be making peace with themselves.
- But the Department for Work and Pensions, which runs the system, has developed a “culture of denial” over its failings, it has been claimed. Needless to say, the DWP has denied the allegation.
You can read much more about the Universal Credit disaster in this article by Another Angry Voice.
Labour has made 10 “emergency demands” for measures Mr Hammond should include in his Budget, if he is serious about helping people who have been locked into the nightmare of a Universal Credit claim. I reproduce them in full below:
1. Cut the five-week wait
- People having to wait five weeks for their entire payment is unprecedented in social security. For comparison, the target wait for Jobseekers Allowance is 10-14 working days
- The excessive waiting period is causing severe poverty, food bank use, rent arrears and even homelessness
- The Conservatives assume that people can survive off savings in the meantime. In fact, families in the UK are more likely to be in debt than have savings and savings are at their lowest level since 1963
- Low-income families are less likely than average to be able to cope with gaps in their finances: researchers at Policy in Practice have found eight in 10 households due to receive UC have savings below £100
- Policy in Practice has estimated it would require one-off spending of £2.7bn spread over four years to get the waiting period down to 21 days
2. Remove the insistence on making and managing a claim online
- The government insists that claimants must make a Universal Credit claim online. This is a problem for those who do not have internet access or lack computer skills
- According to the Department for Work and Pensions, nearly half of claimants need help to make a new claim online. One in three (29%) claims to Universal Credit are closed and not paid within the complicated system that people find hard to navigate.
- The government claims that Universal Support can help people use a computer for their claim. In reality, the funding doesn’t even cover the costs of proving support
- According to the National Audit Office, providers themselves say Universal Support doesn’t meet people’s needs and they have insufficient time to assist people
- There have been 91 JobCentre closures in England alone and, across the UK, 1-in-6 JobCentres have closed
- The government should staff JobCentres sufficiently and provide more funding for support
- People should be able to choose to make a written claim
3. End counter-productive sanctions (e.g. requiring people to demonstrate in an online journal that they are spending 35 hours a week looking for work)
- There is no evidence that sanctions are effective at helping people into sustainable employment
- A major study led by the University of York found that sanctions are pushing people into destitution, survival crime and ill health
- Further, benefit fraud accounts for just 1.2% of total benefits payments
- In 2016, the Department for Work and Pensions estimated it spends more than £240m a year administering the sanctions regime, the majority of which is estimated to be spent on administering conditions (around £200m)
- The NAO estimates DWP withheld £132m from claimants due to sanctions in 2015, and paid them £35m in hardship payments. The overall impact of sanctions on wider public spending, such as homelessness and ill health, is unknown
4. Protect domestic abuse sufferers and allow families to split their UC payments
- Universal Credit makes one payment to a household
- It has been estimated that in 80% of cases the payment will be paid to the male partner
- This can be problematic and harmful if domestic abuse exists in a relationship and one partner exercises coercive control over their partner
- Women’s Aid reports that survivors say that abusers will exploit single household payments. Yet applying for split payments can be dangerous, so many partners will not request a split
- The government only allows couples to request split payments in “exceptional” circumstances
- Domestic abuse survivors say there is a strong case for splitting UC couple payments more routinely or even by default. The Scottish government has passed legislation that requires split payments by default
- The government must remove the rule that split payments can only be made in “exceptional” circumstances. As a minimum, it should not require onerous evidence and it should monitor outcomes in Scotland
5. Protect families from homelessness and give tenants the right to have their housing costs paid directly to their landlord
- Universal Credit pays people’s housing costs to the tenant, instead of directly to their landlord
- Many tenants prefer this arrangement as it allows them to manage their finances. But for some people this can be problematic.
- Vulnerable people, who should be on alternative payment arrangements but are not, are getting into arrears and put at risk of homelessness
- Tenants should be able to choose to have their UC housing element paid directly to their landlord without supporting evidence or the need to have been in two-months of rent arrears
6. Reverse cuts to disabled people
- Universal Credit abolishes both severe and enhanced disability premiums (the SDP is worth £64.30 a week for a single person and £128.60 a week for a couple, the EDP is worth £16.40 a week for a single person and £23.55 a week for a couple)
- Disability groups have warned that the Tories’ cruel cuts to disability benefit in UC are likely to result in them struggling to pay for basic essentials such as food and heating
- People in receipt of SDP currently will get Transitional Protection under Managed Migration, however this protection is lost if, for example, couples split up or get together
7. Reverse the cuts to children: reinstate the family element and get rid of the two-child limit
- This measure limits the child element of Child Tax Credit and Universal Credit to 2 children or children born on or after 6 April 2017. It also limits the child element in Universal Credit to the first 2 children for new claims after this date
- The two-child limit is an attack on low-income families, is morally wrong and risks pushing children into poverty.
- It cannot be right that the Government is making children a target for austerity, treating one child as if they matter less than another
- The Government estimated that this would save £1.2bn in 2019/20
- This measure removes the family element of Child Tax Credit and the Universal Credit equivalent, for first children born on or after 6 April 2017
- It also removes the family premium in housing benefit, which is an income allowance for families with children.
- The Government estimated that this would save£540m in 2019/20
8. Support people on fluctuating incomes
- The way that someone’s Universal Credit is calculated fails to take account properly of fluctuating incomes that are a basic fact of life for many people on low income who are self-employed or in insecure work such as zero-hour contracts
- As a result, self-employed people can find that their entitlement to Universal Credit in the course of a year is lower than someone who is employed even though both have the same annual income
- Self-employed people are assessed monthly for Universal Credit like everyone else, but reporting earnings every month can be onerous for the self-employed as they have to provide information on receipts, minus income tax, National Insurance, permitted expenses and pension contributions qualifying for tax relief
- This flaw also affects people who are employed so that even someone who is just paid twice in a month because their pay day falls near the end of the month can lose their Universal Credit for that month
- Self-employed people should be allowed to report their income annually, not monthly. The government must ensure that Universal Credit takes proper account of fluctuating incomes.
9. Restore work allowances
- The work allowance is the amount that claimants can earn before their Universal Credit payment is affected
- Cuts to work allowances have made working families on universal credit worse off
- The cuts damage financial work incentives, directly contradicting the policy’s stated agenda of making work pay
- According to Child Poverty Action Group, work allowance cuts have the greatest impact in cash terms on households in the second and third deciles (the ‘just about managing’ group)
- Cuts to work allowances have undermined gains from increases in the National Living Wage, personal tax allowances and help for childcare
- The cut announced in the Sumer Budget 2015 is set to save £2.9bn in 2019/20
10. End the freeze on social security
- The government froze working-age benefits for four years from 2016
- These are: Child Benefit, Universal Credit, (non-disability) Tax Credits, Housing Benefit limits, Jobseeker’s Allowance, Income Support and Employment and Support Allowance (except the Support group Component)
- It means that no matter what the rate of inflation is, benefits were not increased in April 2016, 2017 and 2018, nor will they be in 2019
- Inflation has actually been higher than expected – CPI reached 3% in September 2017 – because of the Brexit vote and consequent price increases
- According to the Resolution Foundation, the real cut to many benefits from the four-year freeze is over 6%. Its figures show that the freeze will have reduced working-age household incomes by almost £5 billion in 2019-20
- The Resolution Foundation calculates that £1.6 billion will be saved from the freeze from April 2019
Universal Credit is not the only reason people have to be angry about Mr Hammond’s budget. Consider Mr McDonnell’s comments about other burning issues, also to Sophy Ridge:
What do you think Hammond will do? And how do you think MPs will react?
 Resolution Foundation analysis
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