Great care must be taken on behalf of those who have challenges in reaching a functioning level within universal credit. Unnecessary and unmanageable debt would severely undermine the important principle behind this welfare change. This warning comes from the Centre for Social Justice.
In a report Maxed Out the think tank estimates that millions of people in the UK are currently struggling under the weight of their personal debt, but certain groups are more vulnerable to problem debt than others. Those at greatest risk have low levels of savings, low income and lack of financial resilience. This includes the unemployed, older people, single parents and the poorest people who have little disposable income and who
must spend a large proportion of their income on basic living costs.
Universal credit combines six benefits into a single monthly payment. The one person in the household who receives the payment will have to pay rent and other costs for everyone in the household. This will require financial ability and digital skills which many claimants lack.
The report follows on from warnings from councils, charities, trades unions, businesses and housing groups who expressed concerns about the ability of people to cope with the switch from weekly to monthly budgeting, whilst at the same time getting to grips with the online system.
A recent report on pilot schemes started last year by councils has showed that the scale of support is greater than anticipated and more difficult to deliver. Claimants have been reluctant to take part in budgeting and financial training in group sessions, because of the stigma of revealing personal debt and rent arrears issues. The uptake of group financial education sessions was low, leading to the cancellation of sessions.
The report also found that greater support for online access will also have to be provided. Although 86 per cent of the UK population have access to the internet, the pilots have found that in the case of benefit claimants it is closer to 60 per cent.
According to a report in The Guardian, a DWP sponsored study carried out by three London councils, found that each London borough will have to spend £6m over two years to support vulnerable claimants to get online, help them open bank accounts and manage monthly budgets.