Calls for further delays to fix flaws before million working families move on to benefit

Failure to manage the critical next phase of universal credit, during which about a million low-income working families will be moved on to the benefit, could sink the controversial welfare programme altogether, experts have warned.

The Resolution Foundation says ministers should consider further delays to the rollout of the benefit so that design flaws can be fixed and further safeguards put in place to protect claimants from risks of financial hardship.

There is concern that universal credit could prove politically explosive for ministers when the large cohort of “just-about-managing” working families in receipt of tax credits are subjected to its well-documented problems with payment delays.

More than 2 million households – including about a million working families, as well as 750,000 disabled and ill claimants unable to work – will be transferred to universal credit under so-called “managed migration” over three years from next July.

Universal credit’s reputation, which has already been battered by long waits for payment, chaotic administration and processing errors that have left tens of thousands of claimants in debt, rent arrears and reliant on food banks, will be further undermined if the migration is botched, the Resolution Foundation says.

Administrative errors and delays can add on average an extra three weeks to the formal 35-day wait for an initial benefit payment. Many claimants have no savings and are unable to manage such a lengthy period without income.

Public trust in the benefit is now so weak that families were potentially being put off making claims in the first place, the thinktank argues, while the once-solid cross-party political support for the flagship policy is in danger of collapsing. Many private landlords have said they will no longer rent to people on universal credit.

“Get this final phase of the rollout right and it could help to reboot universal credit’s reputation, but get things wrong and UC’s reputation risks taking another battering, and worryingly some families could be put off claiming UC altogether,” said David Finch, former senior economic analyst and now senior research fellow at the thinktank.

Proposed cuts to tax credits for low income families triggered a substantial backbench Tory rebellion in 2015, while problems with universal credit provoked a similar revolt last year. The Resolution Foundation estimates that 1.8 million working families will see their incomes drop when they move onto the new system.

In a paper, it added: “Politicians in all parties have increasingly found cause to question the efficacy of persisting with the reform.”

The rollout timetable for universal credit, already six years behind schedule, should be extended further to ensure migration is a success, the thinktank says. There should be no mass transfer of claimants until it is clear the system can accommodate them and that problems with payment delays have been fixed.

Campaigners fear that the abrupt nature of the migration – claimants will be sent a letter giving them three months to apply for universal credit before their current benefits are cancelled – will see many vulnerable people fall out of the benefits system.

The Department for Work and Pensions said: “Universal credit is a flexible and responsive benefit, providing claimants with personal support and helping to get them into work faster and stay in work longer.

“As we continue rollout we are focused on ensuring a smooth transition with uninterrupted support for claimants, including those migrating from legacy benefits.

“We continue to listen to feedback and make any necessary improvements during the rollout with our ‘test and learn’ approach. And research shows that the vast majority of people receiving universal credit are satisfied with the service they receive.”