Labour says its findings offer more evidence that the government should pause rollout of new benefit system

This article is more than 2 years old

This article is more than 2 years old

Cash-strapped councils are being forced to set aside extra resources to cushion the blow of switching to universal credit for vulnerable households, according to analysis by Labour.

Responses to a series of freedom of information requests submitted by the party have revealed many local authorities are allocating significant funds to support tenants with rent arrears and provide advice to help them navigate the new system.

Margaret Greenwood, the shadow minister for employment, said: “Universal credit is causing misery and hardship for thousands of families this Christmas and councils are being expected to pick up the pieces. This is yet more evidence that the government should immediately pause the roll out of universal credit so its fundamental flaws can be fixed.”

Newcastle city council reported that it was spending £390,000 supporting UC claimants, almost a quarter of which was for additional rent arrears support.

Liverpool city council said it had spent £175,000 from its local welfare provision scheme on UC claimants, while Shropshire council said it had set aside £20,000 to help food banks to “diversify the type of help they are able to give specifically to suit universal credit.”

In London, Tower Hamlets council said it had set aside £5m over three years to help those affected by the shift to UC, while Barking and Dagenham is budgeting £50,000 from January 2018.

In total, 26 councils said they had set aside extra resources or anticipated increased demand for welfare support as the UC rollout reaches their area.

Universal credit, which is being implemented gradually across the country, bundles together six different benefits into a single monthly payment and is intended to sharpen work incentives.

MPs and charities have raised concerns about the long initial wait for payments and the fact that benefits cuts instigated by George Osborne mean the new system is considerably less generous than the one it replaces.

When Labour convened an opposition day debate on the rollout of UC in October, the government ordered its MPs not to vote rather than risk a backbench rebellion.

The monthly payments, and the fact claimants receive the money directly, unlike the current system of housing benefit which is paid directly to landlords, are meant to reflect the world of work and help claimants learn to manage their budget.

But after pressure from Tory MPs concerned about the impact on their constituents, the chancellor, Philip Hammond, announced changes in November including a reduction in the upfront waiting time to five weeks from six.

The work and pensions secretary, David Gauke, has increasingly begun to publicly reject Labour’s portrayal of UC as creating hardship for welfare claimants. On Twitter, he challenged Frank Field, the Labour MP who chairs the work and pensions committee, this month about the case of an individual voter.

Gauke said: “I strongly believe we have got a really good policy with this that will transform lives, but there is almost a sort of knee-jerk criticism and a temptation in particular with universal credit that you can almost say anything critical about it and it goes without challenge.”

Responding to Labour’s claims about council funding to support claimants, a DWP spokesman said: “Councils have been providing welfare advice and housing payment top-ups as standard, since long before the introduction of universal credit.

“The majority of claimants are comfortable managing their money but advances are available for anyone who needs extra help, and arrangements can be made to pay rent direct to landlords if needed.”



Almost half (49%) of claimants are now receiving an advance when they apply for universal credit, helping to shorten the time without funds, but they must then repay it.