Headlines: September 18th, 2012

The Social Market Foundation has followed other organisations in expressing concern about proposals for introducing Universal Credit next year.

A report from the think tank, ‘Sink or Swim: the Impact of the Universal Credit’ describes interviews with low income families to get views about how they would adjust to six specific reforms under the new Universal Credit.

The report reveals that particular changes to the payment system of the Universal Credit could cause significant hardship for families on the lowest incomes. The report is in line with the concerns expressed recently by seventy organisations representing councils, charities, trades unions, businesses and housing groups.

Based on the research, the think tank recommends that families should be able to opt into an online budgeting tool under the new Universal Credit, which allows them to determine the frequency of payments, as well as earmark money for specific purposes like saving and housing costs.

The report found that most households opposed the move from weekly or fortnightly payments to a monthly benefits payment, citing fears that they would run out of money at the end of the month.

There is also opposition to the proposal that social tenants manage their rental payments, instead of the money going direct to their social landlord, with concerns that it would land households in even more debt, and increase the risk of rental arrears and eviction.

In addition people who lose their jobs could go for over a month with no income at all under the move to fixed monthly assessments, and this could be even longer if employers struggle to meet the new reporting requirements. This increases their chance of going into debt and could act as a deterrent for people to take temporary work.

The report also cites secondary evidence showing that four in ten claimants would find it harder to budget under a monthly payment and only half of those earning under £10,000 receive a monthly pay packet. The SMF says this shows that there is little evidence that moving to a monthly payment would help prepare claimants for going into work.

Downing Street has dismissed calls to delay the introduction of the universal credit benefit system. A spokesman said the project, being pushed through by Work and Pensions Secretary Iain Duncan Smith, was “on track and on time”.