How Universal Credit is destroying a once great nation

Regular readers of my blog will know that on occasion I hand over the pen, metaphorically speaking, to highlight some injustice that should concern us all.

Last week the Trussell Trust reported that it handed out over 1.6m food parcels last year, over 500,000 of them to children, as benefit cuts, Universal Credit delays, and rising poverty fuelled the busiest year in the charity’s history.

The charity also challenged recent claims by the work and pensions secretary, Amber Rudd, that long waits for Universal Credit payments were “absolutely not” causing claimants to use food banks. It called for the five-week wait for a first payment to be scrapped, and for benefits to be uprated in line with the cost of living.

The trust’s figures show that a fifth of all referrals to food banks last year were linked to delays in receiving benefits, and almost half of these were related to Universal Credit. Many claimants do not have the savings to cope with over a month without income, putting them in rent arrears.

And on Friday the FT reported a rising debt problem as people borrow to make ends meet.

The article makes clear that the era when personal debt crises were created by profligate spending has gone: this is now about simply inability to pay basic rent, utility and food costs.

I have first-hand experience of Universal Credit; a close family member of mine receives benefits because he is unable to work (although he does full-time voluntary work for two charities). His Disability Living Allowance was stopped and his other benefits cut when he was moved to Universal Credit. For five weeks he, like others, received no benefits at all. He can no longer support himself without financial help.

Let’s be absolutely clear; there is no reason why, in a wealthy country, anyone should go hungry or suffer the humiliation of asking for hand-outs.  It is barbaric that children, who have no ability to feed themselves, should suffer in this way. There is enough for everyone if it is shared between us.

So what is to be done? Of course Universal Credit has to end: it is known to be exacerbating this problem.

By design.

Yes, this action is deliberate. According to research by a leading think-tank, since the so-called welfare reforms and austerity measures were introduced, almost 2 million people will lose more than £1,000 a year following the switch to Universal Creditwith those claiming disability benefits the worst affected.

Self-employed workers on below average incomes and low-income families with little savings will also be among the biggest losers, the Institute for Fiscal Studies study concluded.

Earlier this month, welfare claimants began the fourth year of a benefits freeze imposed by the former chancellor George Osborne in 2016, which has already delivered cumulative ‘savings’ of £4.4bn.

In March, the annual Households Below Average Income (HBAI) report covering 2017-18 found that 3.7 million children were living in absolute poverty, up from 3.5 million in 2016-17.

If this doesn’t make you angry, it should. Because it’s a problem that is easy to fix.And if government will not act then we need to.

Noel Guilford, Principal at Guilford Accounting
Noel Guilford is the principal of Guilford Accounting a small business accountancy practice specialising in advising owner-managed businesses on current accounting, finance, and tax matters. You can reach him via email at noel@guilfordaccounting.co.uk or by phone at 01244 660866. He is the author of the 'Figure it out - an entrepreneurs guide to understanding your business numbers' which you can obtain by visiting guilfordaccounting.co.uk.​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​ His latest book, How to Build a Successful Business' will be published in 2018.

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