People who were never in debt before have been catapulted into crisis in trial of benefit whose rollout continues despite concerns

For many of Inverness’s universal credit guinea pigs, the past year has been exceptionally stressful. The many glitches of a malfunctioning scheme have already caused widespread misery in this city, which has been trialling various forms of universal credit since 2013. The problems unfolding here offer a taste of what is to come when the system goes nationwide.

The escalating difficulties experienced by Mhairi Thomson, a 35-year-old care worker who faced eviction from her home of 16 years, are typical. She claimed universal credit last September just before she got married; her fiance was moving into the house she shared with her 15-year-old daughter – forcing a reassessment of her benefit eligibility and shifting her on to the new system.

For reasons that remain unclear, the benefit was not paid for five months, leaving her unable to pay her rent, struggling to buy food for her family and often without £2.50 dinner money to give her daughter, who was studying for her exams. Crucially, with no money to pay her phone bill she lost access to her landline and her internet connection, which left her unable to query the absence of payments because the benefit is designed to claimed online. Without her landline, she had to use her mobile to call the helpline at considerable cost, because delays on the line ate up all the free minutes on her pay-as-you-go mobile package, pushing her on to a 30p-a-minute rate.

Quick guide What is universal credit and what are the problems? Show Hide What is universal credit? Universal credit (UC) is the supposed flagship reform of the benefits system, rolling together six benefits into one, online-only system. The theoretical aim, for which there was general support across the political spectrum, was to simplify the system and increase the incentives for people to move off benefits into work. About 2 million people are currently in receipt of UC. More than 6 million will be on the benefit by the time it is fully rolled out. How long has it been around? The project was legislated for in 2011 under the auspices of its most vocal champion, Conservative MP Iain Duncan Smith. The plan was to roll it out by 2017. However, a series of management failures, expensive IT blunders and design faults mean it is now seven years behind schedule, and rollout will not be complete until 2024. The government admitted that the delay was caused in part by claimants being too scared to sign up to the new benefit. What is the biggest problem? The original design set out a minimum 42-day wait for a first payment to claimants when they moved to UC (in practice this is often up to 60 days). After sustained pressure, the government announced in the autumn 2017 budget that the wait would be reduced to 35 days from February 2018. This will partially mitigate the impact on many claimants of having no income for six weeks. The wait has led to rent arrears and evictions, hunger (food banks in UC areas report notable increases in referrals), use of expensive credit and mental distress. Ministers have expanded the availability of hardship loans (now repayable over a year) to help new claimants while they wait for payment. Housing benefit will now continue for an extra two weeks after the start of a UC claim. However, critics say the five-week wait is still too long and want it reduced to two or three weeks. Are there other problems? Plenty. Multibillion-pound cuts to work allowances imposed by the former chancellor George Osborne mean UC is far less generous than originally envisaged. According to the Resolution Foundation thinktank, about 2.5m low-income working households will be more than £1,000 a year worse off when they move to UC, reducing work incentives.

Landlords are worried that the level of rent arrears accrued by tenants on UC could lead to a rise in evictions. It's also not very user-friendly: claimants complain the system is complex, unreliable and difficult to manage, particularly if you have no internet access.

And there is concern that UC cannot deliver key promises: a critical study found it does not deliver savings, cannot prove it gets more people into work, and has plunged vulnerable claimants into hardship.

The speed with which problems spiral into household catastrophes is one of the most striking features of the new benefit system. “After a while I couldn’t afford to make the calls; it was costing an absolute fortune,” Thomson said.

She spent many hours standing in the doorway of Asda, using the supermarket’s free wifi, following the online complaints procedure to try to get the payments restarted. She raised 26 queries in her online journal – which sits at the heart of the new system, and is designed to simplify communication between claimant and the Department for Work and Pensions (DWP); none were answered. The journal told her the money had been paid but her bank account showed it had not. When the housing association rang to tell her she was nearly £1,000 in arrears and faced eviction, she felt close to nervous breakdown.

Thomson’s experiences are neither unique nor particularly extreme by the standards of those inundating advisers at Inverness’s housing associations and the local MP’s constituency surgery. All around the city – whose council, Highland, was one of the first to introduce the full system in June 2016 – benefits claimants, around half of whom are working, have experienced difficulties that have pushed them into serious rent arrears.

Highland council has 1,521 tenants receiving universal credit, 80% of whom are in arrears, amounting to around £1m; the council has said it is worried that the growing debt will reduce the services it is able to provide. With the system being rolled out in 54 more jobcentres nationally this month, concern is mounting in areas next in line.

Inverness is more than a year ahead in trialling the system – and this coalmine canary is looking pretty unwell. “We’re ahead of the curve. We discover new problems every day. It is a disaster,” the area’s SNP MP, Drew Hendry, said. More than 60% of his caseload is connected to universal credit. “This is the biggest part of my day every day; it is so overwhelming.”

Partly the problems are caused by an in-built six-week delay to all new payments, which pushes many families instantly into arrears. Partly they are the result of anomalies within the system. “We see short payments, missed payments, lost paperwork, incredibly poor communication between the DWP and the jobcentre, whose staff are not allowed in many cases to speak to the person within the DWP to find a solution,” he said. “It is a chaotic system, beyond inefficient. Every day we see a different situation where someone is being put under unacceptable pressure. They need to halt rollout so that many more people don’t suffer.”

Thomson has always worked, and has never previously been in debt, but without benefits coming in (to supplement the low wages associated with the essential work done by care workers), she was unable to buy petrol and car insurance, and on the point of losing the car, which would have meant losing her job. Soon after Christmas (which the family could not afford to celebrate) she was referred to a food bank, but was too embarrassed to go.

“We went days without eating properly; we’d just have a bit of toast. My daughter was going to school with no breakfast, and no lunch. It makes me feel so bad to think about it,” she said. When Thomson told someone from the council about her difficulties, it sent a woman from the welfare department to talk about better budgeting – which she found a peculiar response. “There was nothing left to budget.” The family only got by because Thomson’s sister and mother-in-law helped out with food, and her neighbour let her use the landline to try to contact the DWP. Finally her husband, an former soldier who served in Iraq, was advised by a veteran’s charity to go to Hendry’s office, where staff helped Thomson to stave off eviction.

Some back payments have been made, and an army charity contributed to paying off some of her arrears, but she remains in debt and shattered by the experience.

Over a day spent talking to universal credit pilot claimants in Inverness, again and again people expressed bemusement at their situation, stressing that they had never previously been in rent arrears or in debt, and voicing confusion over how their situation had rapidly sped towards crisis.

Leslie Ross, 51, said he had not received any payments since 16 August and that he was surviving on food bank vouchers. He opened his fridge, to show milk, but no food; in his store cupboard he had four donated tins of soup, two tins of custard and some rice pudding. There were a couple of frozen bread rolls in the freezer.

“It has been unreal. Have you ever tried to go to sleep at night when you’re hungry? I don’t eat most days until six,” he said. He too has found his situation complicated by losing his internet connection (owing to non-payment of bills) just at the time he needed it most to query why money was not being paid.

Because the six-week delay for his first payment last year pushed him into rent arrears of around £900, he is paying back £63.56 a month out of minimum benefits allowances, which for the past two months have not been paid. Ross had always worked – a lifeguard, a job at Tesco, a car mechanic, a swimming teacher – until a breakdown in September last year. He has found the experience of trying to claim the new benefit overwhelming, not least because payment accuracy has been erratic. He has a long list of belongings he has sold to keep going – his bike, his fishing equipment, his camera. “I’m on antidepressants because of this. You do start to give up on yourself a bit. Things take a spiral downwards.”

Alasdair Christie, manager of Inverness Citizens Advice, said his colleagues were under pressure, working beyond contracted hours, to help sort out universal credit problems.

“They feel the pain that client is going through. People come in crying, in despair, with no hope of how to remedy the situation. The biggest issue is the length of time that people wait to get their first payment, which is causing huge pressure on families, pushing people to food banks, having a detrimental effect on people’s mental health,” he said. “We’ve seen problems escalate at each point of the rollout – the unfairness, the complexities, the delays. In terms of a benefit system, it is worse than your worst nightmares.”

Facebook Twitter Pinterest Richard Stokes. Photograph: Murdo Macleod/The Guardian

Richard Stokes, 48, a former care worker, is not working because of a breakdown he says was caused in part by the problems he had with claiming universal credit to supplement his income last year. Stokes said a systems error made the universal credit computer believe he was getting double his actual monthly earnings of £500, because two payments came in during one universal credit calendar month, triggering the suspension of his benefits. On another occasion, the universal credit records said he had been paid £382, a sum that never appeared in his bank account. The disparity has never been explained, he said. He too found himself hugely in arrears for the first time; his mother had to step in to pay some of it off, but some of the debt remains.

For some Inverness claimants the problems have been with poor wifi signals in the more remote parts of the pilot area. In places where the signal is weak, claimants can find themselves halfway through filling in a form before losing their data because of a dropped connection.

Ailsa Young, a cook, was dismayed that so much had to be done on smartphones or a laptop – since she has neither. “I wasn’t computer literate and I don’t want a smartphone. I struggled with it,” she said. She was frustrated at the long waits when she telephoned, and angry at the cost. “When people are struggling financially, surely they should be entitled to a free call to find out why the money hasn’t come through.”

Facebook Twitter Pinterest Ailsa Young. Photograph: Murdo Macleod/The Guardian

She too got into rent arrears – for the first time – because of the six-week delay for payments, and visited a food bank – for the first time – when she was in that period with no money. “I’d never been in a situation where I had nothing to eat,” she said. Back in work now, she has paid off the arrears; she describes the experience as “very depressing”.

Jennifer Soley from the local Albyn Housing Society said many other tenants were in similar situations, a large proportion of whom were in work. About 65% of universal-credit-claiming tenants are in arrears, with average debts of just over £700, compared with just 20% of the rest of their residents.

“The thing that disturbs me most is that this isn’t one or two people who are complaining. This is hundreds and hundreds of people.”

Hendry is angry at the government’s refusal to listen to the mounting list problems he has reported. “We have given evidence for three years about the problems we’re seeing, and they have not reacted. The system is meant to support people who are vulnerable, but the ones who are being devastated by it are the ones who can least cope.

“Simplifying the benefit system is the right thing to do. But it’s worthless if the new system is so complex and heartless that it doesn’t achieve any of the objectives.”

A DWP spokesman said: “The vast majority of claimants tell us they are comfortable managing their money. In the minority of cases where an issue does arise, we work closely with claimants, local organisations and landlords to resolve them as quickly as possible.”

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