Sue hit her lowest point at the end of 2016. Unable to buy food and behind with her rent, she phoned the finance company about the debt on her car. She and her family live in a town between Bristol and Bath, the kind of place where getting around with three children – not least to the nearest jobcentre, which is nine miles away – makes having your own transport essential. But she hadn’t met her repayments for three months.

“The lady on the line said, ‘You sound really down – are you OK?’” she recalls. “She could hear I was distressed. And I basically said: ‘No – I’m going to go upstairs and slit my wrists.’ She said: ‘Don’t do that – stay on the line. I’m going to put you through to someone you should talk to.’ It was a counsellor. And I spoke to them for nearly two hours.”

With only £48 a week of child benefit coming in, Sue had effectively stopped eating. “I was trying to make stuff from the food bank last longer. I lived off cereal, so the kids could eat. That went on for three months.”

Quick Guide What is universal credit and what are the problems? Show 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.

Sue tells me all this in the course of an hour-long conversation in the compact house she and her husband rent from a local housing association. Her three children all suffer from eczema so severe they often have to wear bandages through the night, and their bedding has to be changed daily. Her husband is from west Africa, and has only recently been granted the immigration status that means he can work. Relative to what happened to her family in 2016, however, most of her life now seems to be surrounded by a fragile sense of relief.

Sue’s story is just part of the mounting social catastrophe triggered by the new benefit known as universal credit (UC), conceived by the former work and pensions secretary Iain Duncan Smith. It was designed to replace six working-age benefits (including jobseeker’s allowance and child tax credits) and moulded by George Osborne during his six years at the Treasury. It was piloted in some places in 2013 – and is now reckoned to be five years behind schedule.

In Sue’s area, people were pushed into applying for universal credit in May 2016, either because they were new to the benefits system or because they had experienced a “change of circumstances”. In her case, it was the second reason: her eldest son was suddenly denied the disability living allowance he had long received because of the severity of his skin condition (“On the grounds that he was 13, and supposedly capable of looking after himself”), which affected her eligibility to other benefits, and put her in line to be transferred to the new system. “It was presented to me as the only thing I could have,” she says.

At the last count, 630,000 people in the UK were receiving universal credit – and that number is growing fast. The media’s portrayal of the mess the system is in has focused on the six-week gap between applying for the benefit and receiving money, which has pushed thousands of people into debt and food poverty, and become emblematic of universal credit’s failures. In 20% of cases, the delay has been even longer. Now, with the budget looming, there have been reports that the gap is to be cut to four weeks; an attempt by the government, perhaps, to try to quieten the outrage, so the roll-out can continue.

But even if the system eventually functions better, a month is still a long time to leave people without money (by way of comparison, in 2015-16, government targets for the waiting times for income support, jobseeker’s allowance and employment and support allowance were between 10 and 14 days). And besides, the new system’s failures run much deeper and wider than the question of when people first receive it.

The Trussell Trust, which runs Britain’s biggest food bank network, says that in areas where the introduction of universal credit is at its most advanced, demand for its parcels has increased by 30% since April. Across the country, there are longstanding concerns about the new system’s shift from a mixture of benefits paid monthly, weekly and fortnightly, to a once-a-month payment that will make people’s budgeting even more difficult. Lots of people complain about payments that yo-yo up and down, thanks to apparently inexplicable deductions.

The fact that what used to be housing benefit is now paid to often struggling tenants rather than housing associations or councils has added to the huge increases in rent arrears caused by the six-week delay. There are rising complaints about how universal credit treats the growing number of people who are self-employed, and those who have come to the UK from other countries. The fact that UC depends on an internet connection makes it very difficult for a lot of people to access, not least because of the government’s closure of hundreds of public libraries.

The Trussell Trust central food bank, Birmingham: the trust says demand for its parcels has increased by 30% since April in areas where the introduction of universal credit is at its most advanced. Photograph: Sean Smith/The Guardian

As things stand, people tend to apply for universal credit in the midst of changes in their lives which are difficult enough, and the way the system works all too often makes things immeasurably more trying. As with many of the so-called welfare reforms pushed through over the last seven years, there is a sense of a system full of demands and delays that amount to an impossible set of trap-doors, which sends out the message that needing benefits to live is something that’s not just undesirable, but pretty much impossible.

In Sue’s case, her biggest problem was UC’s apparently in-built insistence that her husband had to be part of her claim, despite the fact that his uncertain immigration status had never been an issue when she was receiving carer’s allowance, tax credits and housing benefit. “I kept telling them: we know he’s not entitled to public funds, and we accept that,” she says. “We weren’t making a claim for him. We were making a claim for me and my children. But the people I was speaking to said they were the rules.” Her husband had to go through two lengthy and complicated processes, respectively known as the identity check and habitual residency test. The result was that the time it took to process her application and start paying her the right amount of money went way beyond six weeks, to almost three months.

One of her most vivid memories is of explaining what was happening to her eldest son. “I sat down with him, and I was crying my eyes out. I said: ‘I’m so sorry – I’ve got no money at all for anything for Christmas . It was only through our church’s generosity, giving us bits and pieces for the kids, that they actually had presents on Christmas day. None of it was from us.”

The day after meeting Sue, I head to Newcastle, the first British city where UC was introduced in full, and where its malign effects have long been obvious. The first place I visit is Cherry Tree View, a purpose-built centre run by the city council that houses people in need of emergency accommodation: people evicted, or forced to suddenly leave their home. Among many other issues, the staff here talk about how rent arrears have gone up, and mounting issues with the way the official loans – or “advances” – available to people struggling with universal credit applications only add to their financial woes.

My first appointment is with Paul and Elizabeth Smith, who moved to Newcastle from Fort William in Scotland after he lost a leg because of diabetes. With their 14-year-old son, they moved in with Paul’s mother, who suffers from Alzheimer’sdisease, and who eventually insisted they were evicted , which meant they needed emergency accommodation. At that point, they were also told to apply for universal credit, which meant weeks struggling to buy essentials. Paul is a trained chef, and does his best to work despite his disability; the family now have somewhere to live. But when he talks about their experience of the past year, he wells up.

Even with UC coming in, their problems go on. “I’ve just been told we owe £995,” says Paul. “For ‘overpayment’. I’ve told my job coach at the jobcentre, and he hasn’t got a clue. All I can think of is the fact that I got sick pay during the six-week wait. But if that’s the case, what the hell was I supposed to live on? They’ve not given any reason for it. What I’ve said to them is, if they want it, they can have it. We just won’t be able to pay the rent. I’m sick of arguing with these people. I’m sick of arguing on the phone and breaking down.”

Robert Petch is a soft-spoken 40-year-old who has reached the end of his tether. He began living in the first-floor flat he shares with his two children on 20 September, but he fell so far behind with his rent that he and his children were evicted from their council house. The impossible financial predicament UC had put him in was a part of the explanation. That was compounded by the senseless way the system treats self-employed people.

Robert is a cab driver, a job that, he says, suits his life as a single parent, and doesn’t worsen the sciatica he developed in his 19 years as a postman. His biggest problem is an overlooked part of UC called the minimum income floor: a monthly deduction from his payment, calculated as a multiple of the hourly minimum wage, which is taken from him no matter how many hours he has actually worked, or how much money he has made.

Put another way, the UC system takes no account of the reality of his working life – from the time he puts in, to the expenses he racks up, including the weekly fee of £120 he until recently had to pay a cab firm whose books he was on. As amazing as it may sound, all this is built into the logic of the system: to quote from the DWP’s own literature that if you have been self-employed for more than a year and “earn less than the minimum income floor in any month, universal credit will not bridge that gap. This will encourage you to grow your business and make sure it can support you.”

Having applied for UC in July, he went through the inevitable wait: “not that much of a problem,” he says, though he also tells me he got used to surviving on beans, toast and cereal, and had to use a food bank to feed his family. He got his first payment in mid-August. “£603 and my rent paid,” he says. “I looked at it and thought, ‘This isn’t so bad.’ But I didn’t understand the minimum income floor. Because when September came round, I got £128.28 to last a month. They’d paid me as if I’d made £1,000 profit. And that month, my car had broken down and my insurance had been suspended. I’d actually made £7.75.”

The next month, beyond money to cover his rent, he got £323. By this point, financial stresses and the fall-out from a relationship breakdown meant he had barely worked. “The kids went to live with my mam,” he says. “I went in my room in a sleeping bag and stayed there for two weeks. I didn’t do any housework; I didn’t eat. I was sleeping, and waking up, and taking painkillers – which are quite strong, they make you quite drowsy – and going back to sleep. Just waiting, waiting, waiting, for them to pay us some money. They just make mistake after mistake.”

He tells me that for reasons he doesn’t understand, the hours used to calculate his income floor have been switched without warning from 35 hours to 25 hours – the number that is meant to be used for single parents – and back again. He claims that the people he speaks to on the phone have advised him to either stop working altogether or get a different job, but the money he has invested in taxi-driving and the fact that it squares with his responsibilities as a parent make that a bad choice.

He also makes a point that goes well beyond his own predicament: he knows lots of taxi drivers in Newcastle who currently get traditional benefits; and if they are pushed on to UC, what will the city do for cabs?

Natalie Clasper, 28, moved out of Cherry Tree View earlier this year, after she, her partner and their four children – who are 10, eight, six and two – had to be rehoused because of harassment from someone from their past. The disruption was huge, and made worse by the weeks they spent waiting for UC, and the fact that, with her partner in the midst of long-term unemployment, all she had coming in was £61 of child benefit a week, plus an advance on her first payment that was soon eaten up by rent.

Natalie Clasper: ‘Just because it’s four weeks [instead of a six-week wait], it doesn’t mean people can cope.’ Photograph: Mark Pinder/The Guardian

For the first month of the wait, she was still living at her former house – and as well as a food parcel from the council, she was helped by her neighbours. “I was like, ‘Don’t tell anyone what you’re doing – just bring it in the back door,’” she says. “Just trying to hide the fact that I was struggling to feed my kids.

“I can remember waking up and thinking, ‘God, I’ve got four slices of bread left – shall I make toast, or a sandwich with that?’” she says. “Sometimes, I’d be like, ‘Shall we just lie in bed and watch a film?’ Just hoping they wouldn’t ask for breakfast.”

Life wasn’t made easier by the demands of UC’s online system. “It’s very hard. They’d send me a text [telling her she had a new message on her account], and then I had to run all the way down to Cruddas Park library: getting four kids ready and having to walk down, cos I was thinking to myself, I can’t miss this: it might be them changing appointments, or saying, ‘get in touch ASAP’.”

What does she make of the plan to cut the wait to four weeks? “That just means I would have struggled for two weeks less,” she says. “Just because it’s four weeks, it doesn’t mean people can cope.”

Newcastle’s Citizen’s Advice Bureau (CAB) occupies most of the fourth floor of the city’s main library. The staff here reckon UC now accounts for 20% of the traffic that comes through the doors. “People have issues from very basic stuff – like, ‘how do I log in to the system?’ – to mind-bogglingly complex cases,” says Gayle Purves, an adviser who specialises in inquiries about benefits. “I’m finding it difficult because even the DWP sometimes don’t know.” She and her colleagues use a set of Samsung tablets, on which they help customers log in. It says something about the condition of the welfare state that the £5,000 cost was paid by Comic Relief.

I speak on the phone to Patricia, who had been helped by the CAB. Until eight years ago, she had run a successful food business. She then developed both an auto-immune illness, and a neurological condition which doctors recognise, but have found impossible to diagnose. In December 2016, she lost the one contract that was keeping her in self-employment, and applied for UC.

“I’d like to say it got better when the payments arrived,” she says. “But I’m still not eating. I’ve dropped down to a size six. Last time I was a size six, I was 15. Every single month, I’m about £400 to £500 short of meeting bills.

“I’ve learned that you can make quite a host of things with eggs and flour. You can make drop scones, and pancakes. If you’ve got some potatoes, you can make potato scones, which are awful, but they fill you up. Yesterday, I had two pieces of toast. The day before that, I had two drop scones. Today, I haven’t had anything at all.”

She is also being hit by deductions from her monthly UC payments, apparently traceable to an old speeding fine she says was incurred by someone else driving her car. Until now, the debt was being repaid at £5 a month, but since September, the figure has jumped to £103. “I’ve spent hours and hours on the phone trying to get it sorted out,” she says. I’ve spoken to debt management within universal credit, and they say it’s my case worker’s decision. I’ve spoken to Citizen’s Advice, who said it’s my case worker’s decision. My social landlord says the same thing. But the case worker continually says: ‘It’s not my decision.’ It’s just a hugely flawed system.”

As darkness falls, I meet Charlie Denemark, 19, who was born in the Czech Republic, but has lived in Newcastle since he was nine. In a strong Geordie accent, he explains the details of his life over the past year. By the sound of it, he is estranged from his parents. For a while, he was homeless, sleeping on friends’ sofas. Thanks to a local charity, he now lives in a small flat, which, he says, lacks hot water or laundry facilities. He has just found a minimum-wage job in a factory, but because he has to meet all his housing costs, he is left with £50 a week for everything else.

Three months ago, he applied for UC. Yesterday, he was finally turned down. “I went to the jobcentre,” he says, “and halfway through the interview, the woman said: ‘Hold on – why are you doing this interview? It’s not going to go through.’”

On a nearby computer, he signs into to his UC account and shows me a letter explaining the decision. Whoever wrote it has misspelled his name, and mislaid any sense of coherence.

It reads: “We’re writing to tell you that unfortunately you’re not entitled to Universal Credit from and including [sic]. This is because we have decided that for Universal Credit purposes only you do not have a right to reside and are consequently not resident in the UK … You cannot retain worker status for more than 6 months, unless you are about to take up employment. The information you have provided does not show that you are about to take up employment.”

The next bit is in bold type: “This means that you are a person who must be treated as not in Great Britain. Therefore, you do not have any entitlement to Universal Credit at this time.”

He is incredulous. “Where am I then? I’ve lived here since I was nine. I went to school here. It’s my home,” he says: yet another voice, mystified by a broken system, wondering how on earth he is going to get by.