The failure of Universal Credit

3 Oct 2019



The Tories have been in power for nine years. Incompetence and the promotion of austere, hostile policies have defined their time in office. Floundering from a botched privatisation of the probation service to UN condemnation, this era of Conservative rule has produced three of the worst prime ministers in history, and the country is worse off for it. 


While in government, the Tories have presided over increasing levels of inequality and a fall in living standards. The country is dangerously divided over Brexit. The list of Tory failures is long. But one of their most significant shortcomings has been Universal Credit. 


First outlined as a concept by the Centre for Social Justice, a think tank co-founded by Iain Duncan Smith, Universal Credit is the Tories flagship welfare policy. Combining six means-tested benefits, including Housing Benefit, it seeks to simplify the benefits system and incentivise people into work.


But Universal Credit has failed. A benefit system designed to encourage people into work has instead pushed already vulnerable people into misery and further poverty. Reports suggest that a Labour government would scrap Universal Credit. It would be right to do so. 


Since 2010, there has been a shameful rise in the use of food banks. The UK has the fifth-largest economy in the world. Despite this wealth, many in the country are poverty-stricken. The Trussell Trust, the UK's leading provider of food banks, handed out a record 1.6 million parcels to desperate people in 2018. 


Universal Credit, alongside other policies of austerity introduced by the Tories, has fuelled the rise of food banks. The new benefits system results in people not being able to afford basic essentials like food or rent. Only 8 per cent of respondents in a survey reported that Universal Credit covered their cost of living.


As a result, charities like the Trussell Trust have become an alarming necessity. That food banks have become a feature of society shows the utter failure of Universal Credit in its fundamental role of providing a safety net for vulnerable people. Instead of mitigating poverty, it has allowed people to slip through the net and into destitution.


Research from the Trussell Trust paints an alarming picture of the impact of Universal Credit. In areas where the rollout has started, the use of food banks increased by 30 per cent after 12 months. Showing that the impact wasn't short term, the report found that the use of food banks increased to 48 per cent after 24 months of the introduction of the new benefits system.


The great contradiction of Universal Credit is that it attempts to encourage people into work, yet by claiming the benefit the same people cannot afford to live. Universal Credit cannot incentivise work when claimants are facing such existential challenges. 


An increase in the use of food banks has coincided with an explosion in the number of homeless people in the country. The homeless population has reached record levels, and its number continues to rise. Again, Universal Credit has been a factor in this rise. 



New claimants and those transferring to Universal Credit from the old system have to wait at least five weeks before receiving their first payment. For people already in financial difficulty, this prolonged wait is catastrophic. The delay in payment causes rent arrears, debt and eviction while also increasing the risk of homelessness. 


The Residential Landlords Association reported that in 2018, 54 per cent of landlords who had tenants on Universal Credit had seen them fall behind on their rent. Eviction often follows. So does a growing reluctance from landlords to rent to Universal Credit claimants. With nowhere to go and little government support, claimants often have little choice but to sleep rough.


This rise in rent arrears is not exclusive to the private renting sector. Tenants who claim Universal Credit and rent from local councils or housing associations are also falling into rent arrears. A BBC investigation found that council tenants have more than double the amount of rent arrears than those still on the previous housing benefit. The average amount owed by council tenants claiming Universal Credit is £662.56. In contrast, those on the previous housing benefit are £262.50 in arrears.


Local councils and homeless charities are in agreement that Universal Credit is causing homelessness. As well as impacting those who claim the benefit, local councils are suffering. 


Rising rent arrears means that councils lose out on increasing sums of money. In turn, there is an impact on essential services. By not receiving rent, and already reeling from devastating local government cuts, councils are unable to spend money on infrastructure or the development of new affordable housing.


Universal Credit received support from across the political spectrum upon its introduction. At the time, there was an acknowledgement from all sides that the benefits system needed a rethink. But Universal Credit has not been the necessary fix. Budget cuts, constant delays and rising implementation costs mean that in its current form, Universal Credit cannot achieve its original purpose. It is harming those who it should be helping. 


Universal Credit has yet to be fully rolled out, but the damage and hardship it has caused has been significant. Supporters of Universal Credit argue that the cost of replacing it will be high. Given the human suffering it has left in its wake, no price is too high to end the pain of Universal Credit.


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