Universal credit is a train wreck and must be halted for a major overhaul, the Liberal Democrats have said, despite having introduced the scheme as part of the coalition government.



The party’s work and pensions spokesman, Stephen Lloyd, is to say in a speech on Monday that the party has lost faith in the coalition’s flagship welfare reform with its accelerated rollout just weeks away, and that the Conservatives have altered it beyond recognition.

Lloyd, who won his Eastbourne seat back from the Tories in June, is to say hestands by the original concept of universal credit to make work pay, but that the programme was now “a complete shambles” having had almost £2bn axed.

Universal credit involves wrapping six existing benefits into a single monthly payment, currently paid to around 530,000 people in trial areas. That number is set to rise sharply in the autumn, when it is due to be rolled out to 50 new areas.

Critics have said the new applicants are being forced into crisis by the six-week wait for funds, and that the new policy of paying housing payments directly to claimants rather than landlords is causing many to fall into rent arrears.



“The work allowance section for instance, where people on benefit who move into low-paid work keep enough of their benefit to ensure they earn more money in work than on benefit, has been slashed to the bone,” Lloyd will tell the Lib Dem conference in Bournemouth during an emergency debate on the policy.

““The taper where recipients keep a larger portion of their money before their benefit is cut has also been cut to ribbons. This has rendered the entire principle behind universal credit - to make work pay, something I and the Liberal Democrats passionately believe in - utterly worthless,” he will say. “Universal credit is no longer a beacon policy. It is a complete train wreck, and this government is responsible.”

Lloyd will also say he warned in coalition when he was on the work and pensions select committee that paying housing payments direct to tenants would cause a sharp rise in rent arrears.

The Observer revealed last week that half of all council tenants across 105 local authorities who receive the housing element of universal credit – which replaces housing benefit – are at least a month behind on their rent, with 30% two months behind.

“The Tories ideological fixations over universal credit are leading to appalling consequences for thousands of people,” he will say. “And if it is not checked, stopped right now, in its tracks, so the failings can be addressed, it will be tens of thousands of our fellow citizens slipping into into grotesque levels of debt.”

Lloyd is convinced thousands of families will lose their homes unless the policy is rethought, and hopes the Lib Dems will work with Labour and some Conservative MPs to force a change.

“I know the shadow secretary of state, Debbie Abrahams. I worked with her on the work and pensions select committee when I was last an MP,” he will say. “Let’s both join together in demanding the government pause the universal credit rollout, and let’s do it now, together, before it’s too late.”

Former senior civil servants have also called for the system to be rethought before the mass rollout. Bob Kerslake, the former permanent secretary at the Department for Communities and Local Government, has said there was “enough evidence about the problems of arrears, particularly for some very vulnerable groups, that makes it essential that these issues are addressed before the roll-out continues”.

Concerns have been raised about the six weeks that new claimants are forced to wait until they their first payments. The Trussell Trust, Britain’s biggest food bank network, said that it had come across instances of people having to wait up to 13 weeks, blaming the policy for increased food bank usage and four recent instances of marriage breakdown because of financial pressure.