A new report has labelled Universal Credit "fundamentally flawed" and said the system needs a major overhaul. A total of 21 changes are being proposed in the report from the Trade Union Congress (TUC) in a radical shake-up of benefits from the Department for Work and pensions (DWP).
This includes an increase to payments and work allowances, an end to sanctions, and removing the Minimum Income Floor applied to self-employed claimants. Since the coronavirus pandemic began the number of people claiming Universal Credit has soared by around 90 per cent to 5.6 million. Four years ago the TUC demanded Universal Credit be scrapped altogether.
They wanted it to be replaced with a new system that ends poverty, helps with the additional costs of childcare, disability and housing, and allows people to work the hours that fit their family circumstances, BirminghamLive reports.
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It now concedes: "Achieving these principles requires many more changes to our current social security system than simply replacing Universal Credit. In particular, it is difficult to fully achieve these aims within a predominantly means-tested system of social security. Means-tested benefits are a major part of the social security system in the UK. Around 60 per cent of all working-age benefits are now means tested."
Its new report published last month looks at the issues with the existing benefits system and highlights potential solutions. It includes a proposal for Universal Credit payment levels to go up, stating: "To improve the adequacy of benefits, the TUC has called for the basic level of Universal Credit and legacy benefits, including Jobseeker's Allowance (JSA) and Employment and Support Allowance (ESA), to be raised to at least 80 per cent of the national living wage (£260 per week)."
This comes at a crucial time when there are concerns about the uprating of benefits next April. While the State Pension looks set to get a 10 percent rise in line with inflation, the Government's refusal to commit to a similar increase for other DWP benefits has prompted fears that they'll only go up by 5.4 per cent in line with average wage rises - which would be the biggest real-term cut to social security payments ever seen.
The report also highlights issues with switching all existing legacy benefit claimants over to Universal Credit, which has recently started up again and will carry on until the end of 2024. It says: "There are also serious concerns about the process of managed migration to Universal Credit. Claimants will be contacted to migrate; the process requires claimants to end an existing claim and make a completely new claim. It is not automatic, and the responsibility is transferred to the claimant, resulting in stress and anxiety for them.
"Responsibility for the process of managed migration should be on the Secretary of State (rather than claimants), who should ensure that the termination of existing benefits will not cause undue or unnecessary hardship. And the managed migration process needs to be trialled first and then evaluated."
The full list of recommendations is below:
The 21 key changes needed to Universal Credit
The full list of recommended changes in the TUC's report is as follows:
1. Reduce the Universal Credit taper rate further and look at options for different taper rates for different groups.
2. Work allowances need to be increased and extended to those not currently entitled to them. The second earner should have their own independent work allowance too.
3. Basic level of Universal Credit and legacy benefits, including Jobseeker's Allowance (JSA) and Employment and Support Allowance (ESA), should be raised to at least 80 per cent of the national living wage (£260 per week).
4. Financial support for some disabled people is much lower in Universal Credit. DWP needs to offer more than the current 'transitional protection' to ensure disabled claimants get at least the amount they would have done on legacy benefits.
5. Mixed-age couples where one partner is not yet a pensioner can only claim Universal Credit, which pays less than Pension Credit. The older partner being of State Pension age should entitle the couple to be able to get Pension Credit.
6. Non-repayable grants should be available during the five-week wait for the first payment of Universal Credit, rather than advances that have to be repaid from future benefits.
7. Remove the 'punitive' Minimum Income Floor for self-employed people, which bases their benefits on the assumption they are always working 35 hours a week at the National Minimum Wage even if their earnings fluctuate.
8. Sanctions must be scrapped in favour of proper support to genuinely help people into decent work.
9. Stricter conditions on claimants who are working should be dropped in favour of investment in training and development "rather than wielding the stick of conditionality and sanctions."
10. There should be more options for claiming Universal Credit than online applications and communications, including widely available access to jobcentres for those not comfortable with IT or who do not have access to IT facilities.
11. Managed migration onto Universal Credit from other benefits should be the responsibility of the Secretary of State rather than claimants being required to carry out the transfer process themselves.
12. Transitional protection - to keep benefits at the same level when moving to Universal Credit - should be uprated rather than being frozen so it loses its value over time.
13. Employ more staff at jobcentres and service centres. The DWP announced in March 2022 that it planned to close 41 sites, putting thousands of jobs at risk. A recruitment drive would reduce pressure on work coaches and achieve better outcomes for claimants as well as making Universal Credit more flexible, rather than reliant on digital-only services.
14. Review the current rules of monthly assessment periods and introduce an 'earnings disregard' into Universal Credit so that income can go up a certain amount without affecting benefit payments.
15. Also introduce a three to six month assessment period to provide more stability and certainty for claimants.
16. Employees should be compensated for any errors by employers in submitting earnings details to the tax office, which can affect their Universal Credit award adversely if PAYE data is submitted late or incorrectly
17. Free school meals should be available to all those on Universal Credit. At present there is an earnings threshold in Universal Credit of £7,400 per year, creating a cliff edge for entitlement which Universal Credit was expressly supposed to avoid. In the long term, every child in compulsory education should be provided with free school meals.
18. Claimants should have options to be paid Universal Credit twice or four times per month to allow them to budget to suit their circumstances, rather than these being exceptional temporary arrangements. And to have a similar option of the housing costs element of Universal Credit being paid directly to the landlord automatically in the whole of the UK.
19. Review the way Universal Credit is claimed and assessed on a household basis, rather than per person, to ensure access to the cash for both partners and the prevention of financial coercion. Beyond this, there is a need to look further into the individualisation of social security payments.
20. The childcare payment system needs to be redesigned to allow the cash to be paid upfront and directly to the provider. Currently, the claimant must pay the provider themselves and get it reimbursed. In the long term, childcare needs to be free at the point of use.
21. Remove support with childcare costs from the Universal Credit amount. Attempts to simplify the system with entitlement all lumped together in one benefit payment can result in hardship if there are any problems with the claim. Also, look into which other elements can be taken out of Universal Credit and dealt with separately.
* BirminghamLive have approached the DWP for a comment and will update this when one is provided.
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