Universal Credit a 'potential poverty trap'

Universal Credit (UC) has major flaws that will need to be addressed to avoid becoming a potential poverty trap, a new report has concluded.

Whilst recognising the need for reform of the benefits system, the Joseph Rowntree Foundation's (JRF) report highlights concerns whether UC will actually increase incentives to work and reduce the complexity of the current system.

JRF believes that switching to single monthly benefit payments will present a challenge to low-income families, and is "likely to affect women disproportionately". It also feels that the transition to UC needs "urgent clarification", with the parts intended to support children needing special attention.

The research, which was carried out by Inclusion and the University of Portsmouth, finds that: "Service users must be informed about how schemes are changing at a local level. Minimum national standards for face-to-face services and replacements for the Social Fund would help to ensure transparency and consistency, while still allowing for local flexibility in provision."

The report also addresses concerns over the IT system being developed to deliver UC. Despite the Department for Work and Pensions (DWP) expressing confidence that the system will be ready in time for implementation, the report highlights concerns among IT experts that the "timetable is unrealistic".

Julia Unwin, Chief Executive of JRF, said: “The principle of Universal Credit is sound, but our research has found the actual roll out could unintentionally trap people in poverty and hardship. Universal Credit reforms are approaching at break-neck speed, so the DWP must show similar urgency to address the very serious concerns outlined in this report.”

Dan Finn, Professor of Social Inclusion and report author, commented: “Greater attention must be given to the needs of service users and easily accessible channels for their voice to be heard. There is a case for a visible ombudsman for the benefits and employment services system who can respond quickly if complaints about service delivery reveal systemic flaws in the system.”

In response to the report, a DWP spokesperson said: “Universal Credit will help millions of people by making them better off in work than on benefits. People will have their level of benefit protected when they move onto Universal Credit, and the £300 million spent on extra childcare support will allow more families to move into work.

“We know that people on low incomes manage their money well, but we have always said we would be flexible with people who might struggle and will ensure they get the support they need."