United Kingdom |Explainer

What’s Universal Credit and why has it been controversial?

Talk (13)

Lydia Morrish

Lydia Morrish

"Hi Tom, agreed that should also be ad..."
TS

Tom Saville

"Just a suggestion, but it may be wort..."
Vlad Bourceanu

Vlad Bourceanu

"Hi Lydia - yes, it IS paid in arrears..."
Vlad Bourceanu

Vlad Bourceanu

"Hi Lydia, thanks. I will research how..."

A new system of payments to low-income citizens is causing controversy in the UK. It’s called Universal Credit (UC). UC aims to simplify benefits and also experiment with the concept of giving those on the cusp of poverty a basic living while encouraging them back to work. 

Universal Basic Income, an unconditional payment given to all citizens with no strings attached, is backed by people from all political spectrums, from inventor and Pay-Pal co-founder Elon Musk to executive director of think-tank Adam Smith Institute, Sam Bowman. An unconditional basic income for the unemployed is being trialed in Finland in a two-year experiment costing the Finnish government €20 million.

But in Britain, basic income is a long way off, and the steps towards simplifying a benefts system have been fraught with often hostile debate. Britain is one of the top ten wealthiest countries in the world, according to fact-checking organization Full Fact. But millions of citizens  still have to rely on social benefits from the state to get by.

The government has come under scrutiny before a rollout of its  UC scheme to more low-income or unemployed citizens. This is in light of reports that some impoverished families were being pushed further into financial hardship because of problems with the scheme.

Though UC was implemented with cross-party backing, opposition politicians and charities have been fighting for the rollout to be paused. But employment minister Damian Hinds insists the scheme will proceed.

Universal Credit, other state benefits, and trials of universal basic income, are a result of policymakers finding new ways to give people a guaranteed, basic level of support, as labor markets change and unemployment rates fluctuate.

Many people in the UK who are out of work or on a low income are eligible for state payments in the form of Universal Credit. According to Citizens Advice Bureaux research, more than seven million households will be receiving it by 2022. Over half of them will be in work.

Universal Credit – initially introduced in the UK with cross-party backing during the 2010-2015 coalition government‘s wide-ranging welfare reforms – is the biggest change ever made to the benefits system, says Citizens Advice. But it also warns that seven million households face financial risk if UC is not paused.

The scheme was designed to make the system simpler and provide greater incentives to find a job to prevent people being better off financially claiming benefits rather than working.

UC was announced in 2010 and was gradually rolled out to Job Centres in the UK in 2013. As of mid-September 2017, 610,000 people were on UC, according to official government statistics.

But this year’s rollout of Universal Credit has caused reports that it is putting households under further financial strain.

How is it different from previous state benefits?

Universal Credit wraps six state benefits, such as unemployment benefits like Jobseeker’s Allowance (JSA), housing benefit and income support, into one.

Instead of being paid multiple, separate payments weekly or fortnightly, receivers of UC collect one single monthly payment, or twice a month for some people in Scotland.

The government said in 2016 that the new system aims to reduce poverty and helps claimants get closer to the workplace. The Department for Work and Pensions said the latest statistics (2016) showed that people on UC were finding work faster and earning more money.

But UC is a burden for some, and is provoking further financial insecurity, reports The Guardian, as it can take up to six weeks to receive the first payment. UC is paid in arrears.

The government states on its website that those who don’t have enough to live on, buy food or pay rent while they await their first payment can ask for an advance while their claim is processed. Those who receive an advance need to pay it back in instalments from their future UC payments.

Advances are available for people who have received UC or benefits for six months or more, earned less than £2,600 in the past six months and paid off any previous advances.

However some vulnerable people are still slipping through the economic safety net, and have been forced to take out loans while they wait for their first instalment, driving many into debt.

What is the impact on society’s vulnerable people?

A woman receiving UC interviewed by the BBC (video) said she didn’t have any money. “Not even 4p to my name,” Kelly Shipsey said. She is relying on food banks until she receives her first payout.

The alleged problems with Universal Credit were epitomized when a man from Somerset died awaiting his UC payment, according to ITV News. The broadcaster reported that Chris Gold died days after it aired an interview with him about delays in receiving his payout. Gold’s sister told ITV News he died hungry, and in fear of losing his house, according to the report.

Poverty charity Trussell Trust says that Universal Credit is increasing the number of people needing emergency food. Food banks have seen a sharp rise in referrals since UC’s introduction, according to the Financial Times.

Universal Credit can only be applied for online, posing a further difficulty to claimants who might not have a computer or personal access to the internet.

Latest developments

A rollout of Universal Credit to more people on benefits was due to accelerate from October 2017.

But the Labour Party tabled a motion to pause the process, which was debated in the House of Commons on October 18, in light of the problems reported.

While most Labour MPs and many from other opposition parties including the Scottish National Party were in attendance, very few Conservative Party MPs were present and most abstained from the vote due to a three-line whip imposed on the party. The motion passed successfully with 299 to zero votes.

Prime Minister Theresa May imposed a three-line whip on Conservatives, instructing them to abstain from the vote.

Senior Tory, Sarah Wollaston, chairwoman of the Health Committee, went against the three-line whip imposed on the Conservative Party and joined Labour in supporting the motion. She was the only Conservative MP to do so.

 

But the vote is not binding on the government.

An emergency debate on UC was held on October 24 after Commons voted for the motion, where employment minister Damian Hinds defended Universal Credit.

“Already, Universal Credit is transforming lives and we want more families to benefit from the satisfaction, the self-esteem and the financial security that comes from progressing to a job, to a better job and to a career,” he said.

What do the papers say?

  • The New Statesman published a piece on the reasons why UC is not fit for purpose.
  • Independent left-wing magazine Red Pepper wrote in an editorial that UC is not about saving money, but about “disciplining unemployed people”.
  • A poll by BMG Research for The Independent newspaper found that 74 percent of those surveyed in the UK (including, it is stated, a majority of Conservative voters) would like the waiting time cut.
  • The Economist wrote last June about the ways Universal Credit is stretching the poor with “painful” cuts to benefits. They called the scheme “regressive”.
  • The Times reported that Iain Duncan Smith “blames” former chancellor George Osborne for delays in UC payments.
  • According to The Telegraph, Prime Minister Theresa May is on the verge of a climbdown on Universal Credit, having been warned it could become her “poll tax”, the tax instituted in 1989 by Margaret Thatcher’s government to fund local government.

Sources & References

This piece was produced in collaboration with community member Vlad Bourceanu via the story’s TALK page.


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United Kingdom
Lydia is a staff journalist at WikiTribune, where she writes about politics, women's rights, inequality, sexual politics and more. Previously she headed up the women’s rights and political content at Konbini for over two years. In 2016, she made ‘Building Big’, a documentary about bigorexia and male body image. Her work has also been published in Dazed & Confused, Refinery29, Vice, Lyra, Banshee and Buffalo Zine. She is based in London.

History for stories "What’s Universal Credit and why has it been controversial?"

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16 November 2017

15:09:28, 16 Nov 2017 . .‎ Lydia Morrish (Updated → Tidy)
12:56:30, 16 Nov 2017 . .‎ Angela Long (Updated → living correct)
12:55:52, 16 Nov 2017 . .‎ Angela Long (Updated → trimming and moving pars for flow)
12:39:42, 16 Nov 2017 . .‎ Angela Long (Updated → trim)
12:29:55, 16 Nov 2017 . .‎ Angela Long (Updated → new top, links)
12:06:03, 16 Nov 2017 . .‎ Angela Long (Updated → Elon Musk link)
11:54:24, 16 Nov 2017 . .‎ Lydia Morrish (Updated → Added basic income)

15 November 2017

16:33:22, 15 Nov 2017 . .‎ Lydia Morrish (Updated → Fixed formatting)
16:24:45, 15 Nov 2017 . .‎ Burhan Wazir (Updated → Editing)

05 November 2017

12:26:29, 05 Nov 2017 . .‎ Nigel Peacock (Updated → Updates stat and link from Jan 16 to Sept 17)

02 November 2017

09:38:04, 02 Nov 2017 . .‎ Lydia Morrish (Updated → Tweak source)
09:35:57, 02 Nov 2017 . .‎ Lydia Morrish (Updated → End note tweak)

01 November 2017

16:06:47, 01 Nov 2017 . .‎ Lydia Morrish (Updated → Source note edit)
15:28:40, 01 Nov 2017 . .‎ Lydia Morrish (Updated → added description on collaboration in sources & references)

30 October 2017

12:28:07, 30 Oct 2017 . .‎ Angela Long (Updated → roll-out becomes rollout)
12:24:16, 30 Oct 2017 . .‎ Angela Long (Updated → thumbnail edited)
12:22:48, 30 Oct 2017 . .‎ Angela Long (Updated → final save)
12:20:35, 30 Oct 2017 . .‎ Angela Long (Updated → final fixes)
12:06:47, 30 Oct 2017 . .‎ Angela Long (Updated → final read)
11:11:43, 30 Oct 2017 . .‎ Angela Long (Updated → Thatcher's government reference)
11:08:50, 30 Oct 2017 . .‎ Angela Long (Updated → tightening/ it wasn't the reports that were problematic)
11:05:12, 30 Oct 2017 . .‎ Angela Long (Updated → food banks link for US)
10:53:38, 30 Oct 2017 . .‎ Angela Long (Updated → I hate 'ahead of')
10:50:41, 30 Oct 2017 . .‎ Angela Long (Updated → NAME ON TOP)

26 October 2017

12:49:46, 26 Oct 2017 . .‎ Lydia Morrish (Updated → Tweak)
12:47:47, 26 Oct 2017 . .‎ Lydia Morrish (Updated → Intro)
12:34:48, 26 Oct 2017 . .‎ Lydia Morrish (Updated → Intro)
11:58:46, 26 Oct 2017 . .‎ Lydia Morrish (Updated → Formatting)
11:58:05, 26 Oct 2017 . .‎ Lydia Morrish (Updated → Condensing)
11:49:21, 26 Oct 2017 . .‎ Lydia Morrish (Updated → Tweak, citation)
11:45:45, 26 Oct 2017 . .‎ Lydia Morrish (Updated → Intro tweak)
11:35:43, 26 Oct 2017 . .‎ Lydia Morrish (Updated → Edits)
09:58:56, 26 Oct 2017 . .‎ Lydia Morrish (Updated → Adding JSA and approving Vlad's edits, taking apostrophe off "Citizens Advice" as there is not one)
09:35:15, 26 Oct 2017 . .‎ Vlad Bourceanu (Updated → )
09:31:27, 26 Oct 2017 . .‎ Vlad Bourceanu (Updated → made "unemployment benefit" into "unemployment benefits", as there are several different ones)

25 October 2017

20:07:18, 25 Oct 2017 . .‎ Vlad Bourceanu (Updated → more capitalisations)
20:03:25, 25 Oct 2017 . .‎ Vlad Bourceanu (Updated → minor error corrected)
20:01:55, 25 Oct 2017 . .‎ Vlad Bourceanu (Updated → one more capitalisation found and edited)
19:58:19, 25 Oct 2017 . .‎ Vlad Bourceanu (Updated → capitalised Universal Credit throughout - made minor edits and corrections)
18:04:47, 25 Oct 2017 . .‎ Lydia Morrish (Updated → FT)
18:03:38, 25 Oct 2017 . .‎ Lydia Morrish (Updated → Food banks)
17:57:53, 25 Oct 2017 . .‎ Lydia Morrish (Updated → Bold text)
17:57:00, 25 Oct 2017 . .‎ Lydia Morrish (Updated → Photo)
17:54:04, 25 Oct 2017 . .‎ Lydia Morrish (Updated → Headline)
17:53:10, 25 Oct 2017 . .‎ Lydia Morrish (Updated → Added papers)
17:38:14, 25 Oct 2017 . .‎ Lydia Morrish (Updated → Background on UC)
17:30:00, 25 Oct 2017 . .‎ Lydia Morrish (Updated → Save)
13:42:41, 25 Oct 2017 . .‎ Vlad Bourceanu (Updated → italicised "Independent")
13:39:54, 25 Oct 2017 . .‎ Vlad Bourceanu (Updated → put the Independent poll under the right subheading)
13:37:57, 25 Oct 2017 . .‎ Vlad Bourceanu (Updated → added BMG Research poll from the Independent (with source))

Talk for Story "What’s Universal Credit and why has it been controversial?"

Talk about this Story

  1. Other

    Just a suggestion, but it may be worth mentioning that the policy is being implemented in concert with minimum wage increases and a rising personal allowance. It helps to contextualise a policy that is designed to both encourage people into work and ensure the private sector remunerates them appropriately. Overall, a great theory, but questionable implementation!

    1. Rewrite

      Hi Tom, agreed that should also be added for extra context. Would you like to add a line in? If not I am more than happy to.

  2. Hi Lydia, thanks. I will research how it works exactly and get back to you. It IS on an “arrears” basis, as far as I know, but – again – let me confirm that to you with the relevant source included. I think that, as far as writing help goes, your idea is perfect. What I’d like to do, if that’s ok, is also to do my own research and sketches in the meantime (and write as much as I can in my own draft on my own computer, first), and then we can agree together what goes into the final article and what doesn’t. Hope that’s ok – let me know, of course, if not or if you suggest anything different. In the meantime, I’ll get on with the research 🙂

  3. Please let me know if there’s anything I can help with. I think that would be better than me volunteering to write any sections myself. I would have started the story off myself, but am chronically lacking in time at the moment, sadly. That said, I am happy to research this, provide research material, etc., and help in any other way you want me to, including writing, of course. I’d just rather not commit myself, by my own doing as it were, to writing any of it for sure when my schedule is topsy-turvy 🙁 – unless you ask me to write any of it, in which case I’ll find the time! Thanks 🙂

  4. *Moving conversation from Daily News Agenda* Hi Vlad, yes I think we can show what the media thinks in a balanced way and note the paper’s stances/biases. Let me know if there are any sections you’d like to write – I have added subheadings to give an idea of structure.

  5. Hi Vlad, no worries that you are busy – that’s what I’m here for! It would be awesome if you had any research on the payment system – exactly how it operates. I know people are paid up to six weeks after signing up, and then monthly, but it is on an “arrears” basis. So if you had some documents or links on that, or any other elements you’ve found to be particularly interesting, that would be great. As for writing help – I will get most of it down and then you can have a look over before it’s published?

  6. Hi Lydia. For the human angle (and perhaps more), maybe these stories would be of interest to you as you shape this story? Hope it’s ok to link to them here: thanks! http://www.itv.com/news/westcountry/2017-10-24/man-died-while-waiting-for-universal-credit-days-after-itv-interview/ http://www.itv.com/news/2017-10-23/ian-duncan-smith-calls-for-universal-credit-waiting-time-to-be-slashed/ http://www.itv.com/news/2017-10-22/archbishop-of-york-urges-cut-to-grotesquely-ignorant-universal-credit-waiting-time/ http://www.itv.com/news/2017-10-21/ministers-could-reduce-universal-credit-waiting-time-after-outcry/ Sorry for the “in bulk” “reading material”, haha. Just thought these might help? Again, I’m 100% happy to contribute and help in any way you see fit – and tell me if I’m being too much, haha! Thanks for your patience 🙂

  7. Thanks Lydia – phenomenal job, in my view – hats off to you. I’ve just had a quick look and added in the arrears payment process detail as a small, “aside” comment, in brackets. I’ve also taken the liberty of capitalising Universal Credit throughout – do please correct me if I’m wrong on this one, and on anything else, in fact. I may have another quick look in the morning, but this looks brilliant to me right now. Thanks again!

  8. Back to you, Vlad. Please take a look when you get a chance to see if anything is missing then we can file it to an editor tomorrow. I haven’t added in the arrears payment process, but see if it needs it? Thanks again!

  9. PS – We don’t need to use the sources box for links to websites/articles. Only use when you quote a book/significant body of text/huge study that you can’t link to in the piece. Otherwise something that requires a specific reference.

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