Universal Credit: getting it to work better

The government should cancel or delay reclaiming billions of pounds of old benefit debt that is causing real hardship to Universal Credit claimants.

Despite Universal Credit’s dreadful reputation, this report concludes that it is no longer realistic to pause the programme, let alone scrap it. The government should now make it work better.

The report warns that debt repayment is a fast-emerging issue that currently affects 60% of claimants – 1.5 million people. The largest part of the debt – some £6bn out of a total of £10bn – is due to past overpayments of tax credits which are automatically reclaimed when claimants “migrate” onto Universal Credit – as they are doing in ever greater numbers.

When combined with the now notorious five-week wait for payment for new claimants, the issue of historical debt could damage Universal Credit’s reputation further and undermine its effectiveness.

The report argues that the improvements that are already being made to Universal Credit, plus some further measures, means that Universal Credit still has the potential to achieve one of its key aims: making the transfer into work, out if it, and back in again, smoother for its recipients.

The report calls on the government to:

• Address the issue of historic benefit debt repayment, by in effect ‘writing it off’ or significantly slowing down repayments.
• Provide new claimants, and those being transferred from tax credits, with a two-week ‘welcome grant’ to reduce the reliance on advances and the debt they are creating.