Welfare reform: Government must press ahead with Universal Credit, but crucial changes needed to support struggling families

As a raft of changes to the tax and benefit system come into effect, the Government is being urged to press ahead with the rollout of Universal Credit (UC).

Responding to the changes, the independent Joseph Rowntree Foundation (JRF) says reform of the benefit system is necessary and Universal Credit remains the right thing to do.

But it warns in a new briefing a number of crucial changes are needed to ensure the reform tackles poverty and boosts living standards for low income families.

Katie Schmuecker, Head of Policy at JRF, said:

“Universal Credit remains the right thing to do. The current system is fragmented and traps people in poverty and the prospect of an integrated benefit system that responds to people’s changing circumstances is a prize worth having.

“Now the millionth claim for UC has been made, the time is right to take stock and ensure the reform achieves its goals and helps reduce poverty. It is vital we get this right, but some changes introduced this month are forecast to increase poverty. This will cost us all dear: an estimated £1 in every £5 spent on public services is linked to dealing with the impacts of poverty. For children, growing up in poverty scars their prospects and reduces future earnings, costing the Treasury £6.1 billion a year in lost tax revenue and additional benefit spending.

“Welfare reforms are reducing the support on offer to many low-income families, both in- and out-of-work. This poses a threat to the Government’s message about being on the side of those that are only just managing to get by.”

In its briefing, JRF says the rising cost of essentials poses a risk to living standards of low income working families as most working-age benefits are frozen and cuts have been made to the Work Allowance.

One million claims for Universal Credit have been made since its introduction in 2013. JRF is urging the Government to take immediate action in three areas to improve the implementation of UC:

  1. Reduce the five week minimum wait to receive Universal Credit, which puts people at the risk of debt, destitution and eviction. As UC wraps multiple major benefits into one payment, people are left with few, or no, other sources of income to fall back on while they wait. In Croydon the average wait time for a first payment is currently 12 weeks.
  2. Reverse the two-child limit on claims for UC (and tax credits), which the IFS forecast will put an additional 200,000 children in poverty. Two thirds of the families affected have at least one person in work.
  3. The DWP and the new Metro Mayors should work together to develop an employment support devolution deal to help get people into good jobs and to get on at work. To date the DWP has been slow to embrace devolution, but the creation of Metro Mayors marks an opportunity to better connect employment support and training to the needs of local employers.