BY TOBY PORTER
The effects of introducing the new benefits system, Universal Credit (UC), have been spelt out in a report by independent consultants.
The number of food parcels issued in Southwark alone rose by more than a third in the first quarter of this year, according to the findings by the Smith Institute.
The six-week delay in receiving UC was the reason given for needing support by more than a tenth of those who applied online.
Town hall chiefs have also had to deal with a massive increase in rent arrears for the quarter of its residents who are receiving the new benefit.
The council rent account in Southwark is on average £8 per person in credit, but for UC recipients it’s at £1,178 in arrears on average for each claimant – so the debts of those claiming UC are worse than under the previous housing benefit system.
Since UC was introduced, tenants have already accumulated a £5.8m debt with Southwark council – and this only represents 12 per cent of residents – full rollout could make things even worse.
UC tenants were on average £156 in arrears, while housing benefit tenants had actually overpaid by four per cent of rent due.
Participants in this research almost universally experienced financial hardship as a result of transitioning on to UC, particularly as a result of the significant delays to payment.
The massive rise in hardship in the area has also seen a rocketing number of families claiming food parcels.
Southwark Foodbank Pecan has reported 94 per cent more referrals in the first three months of 2017 compared with 2016. It has seen an even bigger increase in the numbers of families with children it is helping – 179 per cent.
Southwark council’s own local welfare fund – the Southwark Emergency Support Scheme (SESS) – has seen a rise of more than a third in the number of food parcels issued in the first three months of this year, compared with the same quarter in 2016.
Councillor Fiona Colley, cabinet member for finance, modernisation and performance at Southwark council, said: “This report’s stark evidence is why we need to lead this debate; I implore the Government to listen to how this is affecting the poorest and most vulnerable people in our borough, and the potential effects reverberating nationally. UC, in its current form, has the potential to be catastrophic, not just for residents at an individual level, but for councils’ housing budgets.
“The arbitrary delay in receipt of money – particularly for those already in difficult situations such as temporary accommodation, could mean a spiral of debt, poverty and people not being able to afford to eat. I cannot think of a more compelling reason to push for change on this.”
The top fifth of those in arrears collectively owed more than half the level of arrears.
UC is due to be rolled out to about 50 new areas across the country per month.
A Department for Work and Pensions (DWP) spokesman said: “This research into a small group of claimants was carried out over a year ago; now the vast majority of claimants receive their first UC on time and in full.
“The best way to help people pay their rent and to improve their lives is to support them into work and under UC people are moving into work faster and staying in work longer than the old system.
“We also know that over time people adjust to managing monthly payments, and reduce their arrears.
“The majority of people are comfortable managing their money upfront but budgeting advice, upfront benefit advances and direct rent payments to landlords can be provided for those who need it.”
DWP research shows that about 80 per cent of all new claims were paid in full and on time. In June, 92 per cent of all claimants received their full payment on time and the trend is improving.
When new claims are not paid on time, it is estimated that two-thirds have an outstanding verification issue, such as providing bank statements, evidence of childcare costs, or proof of rent. Other times it is because a claimant has not signed their claimant commitment.
For those in financial need, who can show they are entitled to an advance, a payment is made within five working days.
If someone is in urgent need a payment can be made on the same day, the DWP has said. These can be repaid over six months, depending on someone’s circumstances. Up to 52 per cent have so far taken out an advance while awaiting their first regular payment.
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