Universal Credit Welfare Reform Spells Disaster For Birmingham Residents

Ian Duncan Smith

Ian Duncan-Smith is in charge of Universal Credit reforms, that have been called “unworkable” by government advisors

The coalition’s welfare reforms have been heavily criticised by 17 charities and non-profit organisations in a report to Birmingham City Council. The report says that the reforms make child poverty targets “unachievable” and the Chief Executive of Birmingham CAB has warned of “social meltdown” following the reforms. The Castle Vale Tenants Alliance say

The cumulative effect of these changes on the citizens of Birmingham, at this point, is only speculative. It is fair to envisage however that the reforms will have a largely detrimental effect upon thousands of individuals and families who will suffer as a result of the cuts.

Logic says that the reductions will lead to an increase in crime and there may also be a potential increase in people who become dependent on alcohol or illegal substances. There may be an increase in family breakdown, poverty, ill health, domestic violence and even a potential rise in suicide rates. It may also lead to a loss of community spirit or community safety if crime rates to do increase, regressing individual communities back to situations that they have struggled to rise from previously.

Based on the information that is accessible it seems that the reductions will hit the most vulnerable members of society including those with disabilities, victims of domestic violence, children, young adults and single people and families on low incomes.

One of the main changes that will begin to roll out from April 2013 is Universal Credit – a new benefit that will replace and combine Jobseeker’s Allowance (JSA), Employment Support Allowance (ESA), Income Support, Working Tax Credits, Child Tax Credits and Housing Benefit is mentioned by almost every submitter to the report, each explaining a different way in which the reforms will have a negative effect on the people they work with.

Freshwinds said that the

Universal Credit system where benefits are combined, creates a serious potential that those vulnerable groups who experience difficulties may have very delayed payments leading to exacerbation of crisis situations

Universal Credit will move to a largely online system – “Digital by Default” – which has the potential to exclude many people, with CAB telling us that only 64% of Birmingham’s households have access to laptop or pc and Only 30% of BCC tenants have home internet. With library hours slashed due to cuts, this digital divide is a serious issue at the heart of Universal Credit, which will require a concerted effort on the part of the council and support services to overcome. Claimants cannot be expected to pay for expensive internet cafe access and issues of security when using shared or public computers are paramount.

This issue is largely practical though it requires expenditure to overcome and what we have right now are cuts. However, Universal Credit introduces a number of changes which will cause hardship for individuals and families both in and out of work by the nature of the setup.

Housing benefit is being cut with the introduction of the Local Housing Allowance (LHA), which restricts claimants to the cheapest 30% of the market, and threatens to leave 11,500 families in Birmingham unable to afford their rent. This combines with the £500/week benefit cap for couples and lone parents being introduced with Universal Credit – with the average affected claimant losing £93/week. Single adults have a benefit cap of £350/week.

Family Action say

the new benefit system could impact on local families. Universal credit could see support for some disabled children halved with some families losing £1366 per year

Freshwinds outlines the case of an unemployed 26 year old ex-drug addict, who will lose £181/month in housing benefit from April 2013 – and a requirement for him to live in a shared house, an arrangement which may not be suitable for many of Freshwind’s clients. This will leave him just £16/week above the poverty line, giving the “Potential for crisis if any unexpected expenditure occurs”

A second significant change to housing benefit is that the default will be that it will be paid to the claimant, not to the landlord. Whilst this is a positive change for some it may cause problems for others, with Midland Heart saying

some customers were happy with direct payments as they would feel trusted and in control. Others expressed a worry that they would be tempted to spend the money and that some might misuse it. Some spoke of the risk of being financially abused as they currently have trouble handling money.

Sifa Fireside who work with alcoholics and homeless people to support them to independence say they

are particularly concerned that vulnerable people will receive direct payments and fail to pay rents or other charges, therefore leading to evictions, debt and more social problems in general.

It needs to be made absolutely clear that claimants will be allowed to make payments directly to landlords if they so choose.

St Basils, who work with young homeless people, raise concerns about increased homelessness and say they have already had 4,574 young people between the ages of 16-25 seeking assistance as homeless in 2011/12, representing a 32.6% increase on the previous year.
Birmingham Voluntary Services Council (BVSC) agree with St Basils:

We anticipate in increase in homelessness, especially for young people who are no longer going to be eligible for certain welfare benefits under Universal Credit

These cuts will force many people to move, which St Basils say will have an “impact on stability and sustainable communities” as people lose support networks, children are forced to change schools and people are detered from making investments into their home and community, since they don’t know if they’ll be staying there, and BVSC “anticipate a potential breakdown in community cohesion as households struggle to cover the costs of their rent, leading to an increase in people moving out of and in to the neighbourhood.”

Universal Credit also changes the payment system so that all benefits will be paid to a single individual in the household – a change which is criticised by St Basils, who are concerned that over 18s in a household might not see their money, and by Birmingham and Solihull Women’s Aid who highlight the concern for women in abusive relationships:

Payment of UC to only one member of a couple/household will reduce the financial autonomy of women and facilitate abusers who use financial controls. Lack of financial means may delay or prevent victims leaving abusers.

Payments are being changed from fortnightly to monthly, which will make it more difficult for many people to budget. Family Action raise this issue say “This change to monthly payments may make it more difficult for people with mental health difficulties to manage budgets”. But let’s be honest, it’s not just people with mental health difficulties or dependency issues that will experience problems with a longer time between payments – most people working on an average monthly salary have trouble budgeting over a month and struggle towards payday (though not the millionaires in the cabinet obviously), and a sudden large expenditure can leave you without any cash for a longer period of time.
Midland Heart say that they expect this to lead to an increase in people using legal (and illegal) loan sharks payday companies like Wonga – who have already seen a 225% rise in profits in the past year.

Sifa Fireside also raise concerns over sanctions, saying that they are finding “housing benefit is increasingly suspended if people are being sanctioned by Job Centre Plus”. With over half a million sanctions handed out last year, and an increase in the maximum sanction length to 3 years voted through last week, along with an economy that is failing to provide enough work, this situation can only worsen under Universal Credit where all benefits are made through a single system and as a single payment. How many people with a sanction will find themselves homeless as all their benefits get stopped? How anyone can expect this to to anything other than increase crime is a bit of a mystery.
Birmingham and Solihull Women’s Aid call the sanctions “punitive” and call on the council “to plan for the impact on communities, including the likely rise in destitution and homelessness support and emergency food supply including food kitchens.”

This sanctions and conditionality regime will be extended to part time and low paid workers under Universal Credit – a reform that has been called “unworkable” by the government’s own advisors. This will mean that if you work part time, you will have to prove that you are looking for full time work or doing everything you can to get more hours in your job or you will be sanctioned.
This comes alongside a huge rise in part time working, with nearly a quarter of a million people in the West Midlands in part time work whilst looking for full time work. There will be many people caught up in this regime who are doing what they can to find full time work and will lose their benefits and possibly housing from this. This is a particular issue for parents who might struggle to find affordable childcare.
Self-employed people may have it even worse as they will have to show they are working and earning enough every week – so someone with an irregular work pattern who might do 70 hours one week and none the next faces sanctions and conditionality, whereas currently they can average their hours out over the year.

All in all Universal Credit is looking set to be a disaster for Birmingham residents – not just out of work claimants but also part time and low paid workers – and as the benefit cap and sanctions regime increase homelessness and force people to move, it will also have a large effect on everyone else as community networks are broken up and social cohesion breaks down.
The potential trainwreck of an IT project to rival the failed NHS IT project should be enough to worry anyone, and with Universal Credit coming under increased scrutiny and criticism not just from national charities but also from within the government, we may be able to stop this still – but only if we demonstrate resistance on the streets – join us on Sunday 7th October to demonstrate at the Tory Party Conference in Birmingham and then in London on Saturday 20th October for the TUC National Demonstration.

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30 Comments

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30 responses to “Universal Credit Welfare Reform Spells Disaster For Birmingham Residents

  1. Pingback: Birmingham Trades Council » Universal Credit Welfare Reform Spells Disaster For Birmingham Residents

  2. Reblogged this on Gogwit's Blog and commented:
    The highlights, again:
    Universal Credit; “Unworkable” – “Disaster” – “Social Meltdown”

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