Parliamentary Committees and Public Enquiries
Substantial reform of Universal Credit needed to protect the most vulnerable
The Economic Affairs Committee publishes its report 'Universal Credit isn't working: proposals for reform', which calls on the Government to make substantial changes to universal credit in order to protect the most vulnerable.
- Report: Universal Credit isn’t working: proposals for reform (HTML)
- Report: Universal Credit isn't working: proposals for reform (PDF)
- Inquiry: The economics of Universal Credit
- Economic Affairs Committee
Universal Credit is failing millions of people, particularly the most vulnerable. The Economic Affairs Committee agrees with the original aim of Universal Credit but blames the scheme’s design for soaring rent arrears and the use of food banks.
Cuts to social security budgets over the last decade is causing widespread poverty and hardship. Universal Credit needs urgent investment to catch up and provide claimants with adequate income. The temporary increase in the standard allowance in response to the Covid-19 pandemic shows that the previous level of awards was too low. The increase should be made permanent.
The Government is using Universal Credit to recover debt, mostly £6 billion of historic tax credit debt. Deductions of up to 30% of the standard allowance, and in some cases more, can be taken from claimants. This has left many households with less money than they are entitled, often at no fault of their own. Tax credit debt should be written off as it is unlikely to be repaid.
The five-week wait for the first Universal Credit payment is the main cause of insecurity. This wait entrenches debt, increases extreme poverty and harms vulnerable groups disproportionately. The Government should introduce a non-repayable two-week grant to all claimants.
The way payments are calculated can result in large fluctuations in income month-to-month, making it extremely difficult for claimants to budget. The level of awards should be fixed at the same level for three months. There should be a mechanism to enable claimants to have an early reassessment if their circumstances change.
Lord Forsyth of Drumlean, Chair of the Economic Affairs Committee, said:
"Most people, including our Committee, broadly agree with the original aims and objectives of Universal Credit. However, in its current form it fails to provide a dependable safety net. It has led to an unprecedented number of people relying on foodbanks and not being able to pay their rent.
"The mechanics of Universal Credit do not reflect the reality of people’s lives. It is designed around an idealised claimant and rigid, inflexible features of the system are harming a range of claimant groups, including women, disabled people and the vulnerable.
"Universal Credit needs more money to catch up after 10 years of cuts to the social security budget. It requires substantial reform to its design and implementation, the adequacy of its awards, and how it supports claimants to navigate the system and find work.
"The five-week wait for a first payment must be replaced by a non-repayable two-week grant to all claimants. The monthly payment calculations which can result in big fluctuations to claimants’ incomes should be fixed for three months. Historical tax credit debt needs to be written off.
"The punitive nature of Universal Credit has not worked. It punishes the poorest by taking away their sole source of income for minor infractions. It needs rebalancing, with more carrot and less stick, particularly as large numbers of claimants will have ended up on it because of events completely out of their control."
The Committee’s other key findings and recommendations include:
- The Government must prioritise helping people into work, particularly with the increase in unemployment that the Covid-19 pandemic is causing. All claimants should have a work allowance, at a higher rate than now, to allow them to keep more of their award as they move into work.
- The Government should consider reducing the taper rate to ensure that the poorest in society do not pay higher marginal effective tax rates compared to the richest in society.
- The conditionality requirements on claimants who can look for, or prepare for work, has been increased significantly over recent years. Less emphasis should be placed on obligations and sanctions. Instead, there should be more support to help coach and train claimants to find jobs or to progress in their current roles. Conditionality should be adapted to accommodate changing labour market conditions, including at the local level, particularly in the light of the economic impact of the Covid-19 pandemic.
- The UK has some of the most punitive sanctions in the world, but there is limited evidence that they have a positive effect. Removing people's main source of support for extended periods risks pushing them further into poverty, indebtedness and reliance on food banks. There is a substantial body of evidence which shows that sanctions harm people’s mental health. The Government should evaluate the current length and level of sanctions. It should also expedite its work on introducing a written warning system before the application of a sanction. Sanctions must be a last resort.
- The Government is doubling the number of work coaches in response to potential levels of high unemployment. This may not be enough to support people to find work in a stagnant labour market with high levels of competition for jobs. A cap should be introduced on the number of cases for which each work coach can be responsible.
- Paying awards on a monthly basis does not reflect the way many claimants live. It causes unnecessary budget and cash flow problems. All claimants should be able to choose whether to have Universal Credit paid monthly or twice monthly.
- Including childcare support in Universal Credit was a mistake. Paying costs in arrears has been a barrier to in-work progression and in some cases, it has been a disincentive to work. The Government should remove childcare support from Universal Credit and be made into a new standalone benefit paid in advance.
Latest News from
Parliamentary Committees and Public Enquiries
Committee pilots new ratings system to hold Government to account06/08/2020 09:25:00
An independent evaluation system that will give ratings on the Government’s progress against its pledges on health and social care targets is to be piloted.
New inquiry: Pre-legislative scrutiny of the draft Building Safety Bill05/08/2020 13:05:00
The Housing, Communities and Local Government Committee has announced a new inquiry to undertake pre-legislative scrutiny of the draft Building Safety Bill.
Employment and COVID-19 inquiry launched by Lords Economic Affairs Committee03/08/2020 16:15:00
The Economic Affairs Committee launches its inquiry into employment and COVID-19 and invites written contributions to its investigation. The deadline for submissions is 10 September 2020.
Peers call for more transparency on trade deals03/08/2020 15:33:00
The International Agreements Sub-Committee has written to the Government outlining the concerns they’ve heard from stakeholders about some of the Government’s planned trade agreements and calls for “stronger powers for Parliament in scrutinising trade deals”.
“Slow, inconsistent and negligent approach” to social care in pandemic30/07/2020 15:33:00
The Government’s “slow, inconsistent, and at times negligent approach” to social care in the Covid-19 pandemic has exposed the “tragic impact” of “years of inattention, funding cuts and delayed reforms”, leaving the sector as a “poor relation” that has suffered badly in the pandemic.
Non-tariff barriers require urgent consideration in the UK-EU negotiations30/07/2020 13:33:00
The EU Goods Sub-Committee, chaired by Baroness Verma, writes to Michael Gove about its inquiry on Beyond tariffs: facilitating future UK-EU trade in manufactured goods.
Conduct Committee publishes report on the Conduct of Lord Stone of Blackheath29/07/2020 15:33:00
The House of Lords Conduct Committee yesterday published a report by Lucy Scott-Moncrieff CBE, the independent House of Lords Commissioner for Standards, into the conduct of Lord Stone of Blackheath.
Chair calls on Government to learn lessons from gaps in worker and business support29/07/2020 12:43:00
Following a series of evidence hearings on the impact of coronavirus, with Ministers and representatives from businesses, trade unions, the self-employed, consumer and worker organisations, Darren Jones, Chair of the Business, Energy and Industrial Strategy (BEIS) Committee, has written to Secretary of State Alok Sharma outlining a number of key issues for the Government to address in its approach to support for business and workers as the country emerges from the Covid-19 lockdown.