Katie Evans, Head of Research and Policy, Money and Mental Health

Universal Credit: When problems outweigh the benefits

Today the National Audit Office, the watchdog on government spending, has published a report criticising the rollout of the government’s flagship benefits reform, Universal Credit.

This comes hot on the heels last week of the publication of detailed research with people already receiving Universal Credit, which finds serious problems with the way the system is working.

Universal Credit aims to replace six benefits previously paid to people who were out of work, struggling with ill health or on a low income, simplifying the system and reducing costs. In practice, however, the programme has been beset by serious difficulties. In particular, today’s NAO report criticises the government for not measuring the number of claimants experiencing difficulties and for being slow to respond to concerns raised by local authorities and charities about how the changes were affecting people.

The problems with the system

One of the big ways in which Universal Credit was meant to save money was by encouraging more claimants to complete the processes of claiming benefits and managing them independently online. In practice, however, data suggests that only half of claimants (54%) were able to make their claim without any help, and a third of claimants (31%) say that they need more ongoing support to manage their Universal Credit account.

Mental health problems can make filling in lengthy forms, like a Universal Credit application, significantly more difficult. Given the high proportion of Universal Credit claimants who are likely to be living with mental health problems, we’re not surprised that so many people are struggling with the process.

Everything is an uphill struggle to sort things out like filling in forms, they fill me with dread.”

Help is technically available to claimants who need it – but to reach it, they must be able to make a phone call. When many people experiencing mental health problems find telephone calls very difficult, this may mean that help is practically inaccessible, and people are left struggling to claim their entitlements alone.

Money matters

Another aim of the Universal Credit programme was to make receiving benefits more like receiving a salary. It aimed to give claimants the responsibility, in most cases, for paying rent and budgeting to make sure money lasts through the month. While there is some budgeting support available to help people adjust to this switch, it is very limited.

This is particularly problematic for people experiencing mental health problems, who can experience a range of symptoms which make budgeting more difficult. This includes short term memory problems which make it difficult to keep track and remember when bills are due or have been paid, and reduced problem solving abilities which can make simply doing the sums a time-consuming and exhausting task.

“My husband and I are both bad at budgeting and we get wages weekly and monthly and benefit payments four-weekly. It makes it really hard to have a proper budget for everything.”

Given this lack of support, and the stories we have been hearing for some time about the difficulties experienced by Universal Credit claimants, it’s not altogether surprising to find that a large proportion of claimants are falling into debt – but it is enormously worrying.

Eight or nine months into their claim, four in ten claimants were found to be falling behind on bills or in real financial difficulty. Half of claimants had needed to find money from elsewhere over the last three months to make ends meet – often borrowing from family and friends, taking an advance on future benefits claims, or using an expensive overdraft. In every case, borrowing this money postpones the immediate problem – but will leave people with less in future. While families supporting each other financially is often a positive experience, our recent research shows that this sort of informal lending, often undertaken by people with few other options, is a potential risk factor for abuse and wider relationship difficulties.

Where do we go from here?

We hope, in light of this report from the National Audit Office, the government will reflect on some of the choices it has made in the design of the Universal Credit programme, and take steps to make sure the service works for people experiencing mental health problems in particular.