Letter sent to Greater Manchester MPs detailing concerns around the roll out of Universal Credit

Read the letter below:

Ahead of today’s debate on Universal Credit in the House of Commons, I wanted to share with you some of the concerns generated by the experience of Universal Credit in Greater Manchester and encourage you to raise them in the debate.

As you will know, I have made tackling homelessness a priority in Greater Manchester and we are now starting to make progress through the efforts of our Districts and many other public and voluntary and community sector bodies. The Prime Minister’s announcement last week of a new £3.8 million fund - the Greater Manchester Homelessness Prevention Trailblazer - was a welcome addition to that work. However, many people across our public and voluntary services have raised with me their grave concerns that all of that progress is being put at risk by the roll out of Universal Credit.

The problems caused by Universal Credit have been clearly demonstrated by experience in Oldham, where Universal Credit has been piloted. In Oldham, more households are failing to make payments for housing costs, falling in to arrears and becoming at risk of homelessness since full service Universal Credit went live in April this year. Figures from First Choice Homes Oldham, the largest local social landlord, show that:

• The percentage of customers who are in arrears for self-payers and Housing Benefit recipients currently stands at 18% whereas for Universal Credit customers this is 68%;
• 25% of their tenants on Universal Credit are having legal action taken against them to recover rent, including possession proceedings, and 15 families on Universal Credit have already been evicted;
• The rental income of social landlords is also being hit, with First Choice Homes forecasting that their rental income will decrease by £1m per annum as a result of Universal Credit changes.

Experiences in Wigan have reinforced this. They have found that:

• In council tenancies across Wigan borough the proportion of Universal Credit claimants in arrears with their rent is 80.4%, compared with 36.7% for those tenancies where Universal Credit is not claimed;
• The average arrears on a standard tenancy stand at £124.13 whereas the figure on a Universal Credit tenancy is £448.34. 

Additionally, issues have materialised for young people who can no longer receive payments towards their housing costs as well as for people living in temporary accommodation. Problems for claimants are exacerbated as many need to borrow money to meet daily living expenses in the interim period from making their claim to receiving their first payment, so when they receive their payment they already owe this to lenders. Increasing rent arrears place tenants at risk of eviction.

Based on this experience of the implementation of Universal Credit in Greater Manchester, my view is that, while there is a sound argument for simplifying the benefit system, at present Universal Credit is not delivering its stated aims. The following policy decisions made by Ministers require immediate review:

1. Waiting days: New claimants are not entitled to any Universal Credit for the first seven days of their claim, which is causing significant hardship as many people simply do not have the savings to cover this period. This is simply unfair.
2. Monthly payments: Claimants need to wait up to six weeks to receive their first payment and are then paid monthly, which is supposed to mimic receiving a monthly pay check (although we know that in reality many people are paid fortnightly, weekly or even daily). The reality is that claimants are falling deeper into debt, accruing significant rent arrears, facing potential eviction and suffering undue stress and worry. Quicker and more frequent payments are necessary.
3. In-work support: The significant cuts to welfare budgets have delivered a policy that is at odds with the guiding principles of Universal Credit and now for the most vulnerable families, particularly those with caring responsibilities, it simply does not pay to work so the incentive to increase hours or move into work has gone. Real financial incentives to move into and progress in work must be brought back into UC. 

These policy decisions are further compounded by implementation issues. For example, there have been significant delays in processing claims, so claimants are having to wait longer than six weeks (sometimes up to twelve weeks) to receive their first payment. The claims process is complicated and confusing, with many people failing to complete the process due to lack of digital skills. For example, claimants do not always realise that they need to make a separate claim to Council Tax Support and become liable for their full Council Tax bill.

As this experience shows, these are areas of significant and genuine concern, which is why I am calling for a pause in the roll out of Universal Credit and asking for you to raise these issues in the debate today. I hope you will be able to do so.

Yours sincerely,

Andy Burnham