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Universal Credit. 20-30% don't pay the rent.

(140 Posts)
CogitoErgoSometimes Mon 26-Nov-12 13:58:01


Anyone pick up on this story? As part of the move to Universal Credit where claimants are given a sum of money each month and expected to manage it, a pilot study showed that about 20 - 30% of recipients failed to pay the rent on time. Given cash rather than the money going directly to the landlord, a surprising number defaulted on the rent. Extrapolated up a 20 -30% failure rate would be disastrous and plans are having to be drawn on how to support people in running household budgets and setting priorities.

I'm largely a supporter of UC as I think the current system is over-complex. I also realise that money-management doesn't come naturally to many. But if such a large percentage of people would struggle to manage a monthly benefit income this way, how would they make the transition to paid employment?

Wallison Wed 28-Nov-12 20:30:39

Yes. It is just about subsidising employers who, if they had to treat their workers with any kind of consistency or pay them fairly, would go under. Ie shit businesses. If any govt was serious about making work pay then they would do away with zero/limited hours contracts and raise the minimum wage. But neither the tories nor labour will do this. The problem isn't scroungers, or people who can't budget properly, or transitions into work. It's high living costs - especially housing, which is just fucking insane - and low wages. Unless and until any govt admits this and does something about it, then the situation will remain the same.

OutragedAtThePriceOfFreddos Wed 28-Nov-12 20:53:31

I agree living costs are to high in relation to average income, but I don't think UC is about subsidising employers. Much of it will be paid to people who don't work.

Wallison Wed 28-Nov-12 21:11:31

Working people will be eligible for it too, just as already most people who claim HB are in work. The only people who won't be eligible - as far as I can see - are people who work part-time ie people who are the lowest decile of the working poor - the 'underemployed' as that R4 feature spoken about above talked of. This to me is madness, as it penalises those who would rather take a job - any job - than live off benefits alone.

MiniTheMinx Wed 28-Nov-12 21:26:11

I'm not sure, isn't it meant to do away with the 16 hr rule?

Even unemployment benefits are a type of indirect subsidy to employers thoughFreddo because having a larger pool of unemployed people gives employers a lot of leverage over pay and conditions. At a subtle level it sends the message to workers to just suck it up! think how many people now live in fear of being laid off or having their contracts altered. If demand isn't restored to the real economy soon then more people will be laid off at a time when Ozzy and chums are going to give employers the right to offer (worthless) shares instead of employment rights. At a not so subtle level it puts money in the pockets of unemployed people to spend with said businesses, businesses which have never contributed to that workers income and many of whom also avoid paying corporation tax here. How many people on benefits save money shopping on ebay.......where does ebay pay it's taxes?

edam Wed 28-Nov-12 22:07:59

It's very easy to blame the individual and assume they are incompetent or bad. But that's misleading. You need to look at what actually happens and why people get into difficulty. Wallison's explained how the individual is actually at the mercy of a chaotic payments schedule - and how you can be left short of the rent money most months even if over a year you are in theory getting enough (and with caps on housing benefit, many people will be short of the rent full stop). What's more, many people suffer from sudden changes in their benefits - mistakes are common. You can't rely on a certain amount of money coming in one one known day every month.

The Joseph Rowntree Foundation has studied this and says universal credit could leave working people strugging with an even more chaotic benefits system.

Wallison Wed 28-Nov-12 22:30:34

Yes. At least at the moment with different benefits being paid on different cycles, you will have a couple of months in the year with 'double payments' of one benefit or another as they each happen on different times. This allows for weekly budgeting and juggling things around. This won't happen if everything is paid on the same four-weekly basis.

Another thing that is worrying is that the system will depend on people accessing their claim online - the very poorest do not have computers or internet access outside of their local library, and if they are working then that makes it even more difficult to trot along there. If a mistake happens now, it is bad enough with centralised numbers and no-one who makes decisions being available to talk to. But if you add a further level of obfuscation in making everything online, this further exacerbates the problem.

edam Wed 28-Nov-12 23:04:01

Indeed, making it online only excludes millions of people - I saw a staggering stat that 7m people in this country have never been online. The poorest and most vulnerable (and the poor and vulnerable elderly) are the least likely to have access to the internet at home and now libraries are closing or reducing their hours, how the hell are they supposed to manage?

edam Wed 28-Nov-12 23:05:22

(You'd think the govt would have noticed how badly the police and crime commissioner elections went after they decided to only make information available online... it's almost as if the buggers want to restrict access to benefits.) hmm

Wallison Wed 28-Nov-12 23:08:40

Exactly. And even if they do manage to get online via a library or whatever, I bet that it will take more than one visit to sort any mistake out, and there definitely won't be any emergency cash or giro payments or whatever to help people over a rough patch caused by the mistake.

The entire thing seems designed to make life even more difficult for the poorest, which when you consider that they are largely fucked because of economic circumstances waaaaay outside of their control, and likely to remain so for a long time, just seems vindictive to me.

DudeIAmSoFuckingRock Thu 29-Nov-12 00:47:32

are the govt going to provide free computer skills training for the 7 million that have never been online? are they going to pay everyone an internet element in their UC payment?

DudeIAmSoFuckingRock Thu 29-Nov-12 00:48:42

and what happens if for whatever reason talk talk or whoever are down for a day? are people going to be sanctioned if they miss their deadlines as a result?

MiniTheMinx Thu 29-Nov-12 09:03:05

Some of the poor and elderly or people with disabilities, life limiting conditions etc, even if the library were not closing, wouldn't be able to access the facilities. What about people who are sight impaired, are they going to make RNIB or whoever aware that these people will need help.

I agree, I think they are trying to make it very much harder for people to claim.

niceguy2 Thu 29-Nov-12 09:17:48

To claim that UC is some sort of weird subsidy to businesses is frankly ridiculous. If you truly believe that that then so is tax credits & housing benefit etc.

The whole online only thing is also a piss poor argument. It's the 21st century. We have computers now. If governments were never allowed to move forwards I guess we'd all still be running around in horse & carts for fear of putting blacksmiths out of work.

It reminds me of those who were against the change to Chip & Pin in case the vulnerable couldn't handle it. I've never seen anyone who didn't understand it.

Some people like my very own mother wouldn't have a clue about the computer. It's true. But she can ask someone for help. If someone is very vulnerable or has special needs then surely they already have someone who can help them. Friend, family, carer? Heck, if a stranger asked me for help I'd happily spend a few hours with them taking them through the forms.

Universal Credit will not be perfect. No system is perfect. I'm sure people will find someone who loses out. And I'm sure if you sit there and pick holes at it, you'll find something to criticise. But for me, as long as the overwhelming majority get a better service from the new system then I'd say it's a step in the right direction.

Leithlurker Thu 29-Nov-12 09:41:25

Hahahaha niceguy you have finally lost the plot, or your senses. Chip and pin what a wonderful invention a gift to fraudsters and identity theirs across the world. Is anything done to combat this fraud, why yes blame the people who use their cards in a manner that allows their details to be observed. Except banks have been forced to accept that gangs are operating on a massive scale using many different scams to get card details. So this rush to computers is acceptable because the damage and the mistakes are just like collateral damage. Meanwhile again the mess will be left to the claimants to sort out.

Your lovely assertion that people with special needs have people to help them belies your own philosophy of government cuts. You have argued time and again that cuts are needed, well tell you what buddy the cuts are to local services provided by councils and charities so that this army of people who will be helping people just do not bloody exist. Even if they did back to chip and pin, your not supposed to tell people your number, but your happy for very private matters like people having to pee in a bucket cos they cannot get to the toilet to be broadcast, as well as NI numbers, bank details, in fact all the things that identity fraudsters need.

Last but not least, we already have millions in unclaimed benefits mostly because people have difficulty accessing the system. Well this will soar and people will lose money, homes, and health because yes in this technology savvy age, people not just the old but plenty of all ages prefer to talk to a human. Bring back proper dap offices staffed with people who know what their talking about, offering a personal service that will weed out the fraud as well as help the needy. Fund public services and save the country a fortune.

Xenia Thu 29-Nov-12 09:48:08

The wiki entry on it is a reasonable summary

"The Universal Credit was championed by Iain Duncan Smith and announced at the conference of the Conservative Party in 2010. The coalition aims to implement it fully over ten years and two parliaments, intending to cut costs and to ensure that people are better off in work. Unlike some existing benefits such as Income Support that have a 100% withdrawal rate, the Universal Credit will be gradually tapered away, like tax credits and Housing Benefit so that people can take a part-time job and still be allowed to keep most of the money they receive.

There will be substantially higher earnings disregards in Universal Credit but these will be reduced where any housing support is payable.

By comparison, Jobseeker's Allowance allows only £5 of earnings disregard per week for single adults. Thus, people working eight hours a week for £6 an hour would earn £48 pounds a week, but would have £43 a week deducted from their benefit and would therefore only gain £5 extra per week by working. In a minority of cases, people could lose significantly more by no longer qualifying for Housing Benefit, though not being able to work sufficient hours to qualify for working tax credits and therefore be 'better off' claiming benefit rather than working.

When implemented, Universal Credit will drastically affect the low-paid self-employed as well as anyone who makes a tax loss.[2] It is proposed that Universal Credits, like the current Working Tax Credits, will be "limited to those who exceed the 'floor of assumed income'" based on the National Minimum Wage.[3] As well as directly affecting self-employed people, excluded from any set minimum wage, it could also affect employees who receive below the minimum wage, hitting the poorest workers the hardest (however no legal workers should be earning below minimum wage, so only illegal workers would be affected).

The Tax Credits being incorporated into the new Universal Credit currently taper, with a withdrawal rate of 41% (2011/12 figure) once the recipient earns above £6420 (2009/10 figure). This income will have already been subject to 11% national insurance, plus 20% income tax on any income above the personal allowance."

OutragedAtThePriceOfFreddos Thu 29-Nov-12 09:52:58

From the DWP document about universal credit.

The Department for Work and Pensions recognises that there will continue to be a minority of people who cannot use online channels. For these people we will offer alternative access routes, predominantly by phone but also face to face for those who really need it.

So there you have it. People who cannot access the Internet will not be forced to or face losing their benefits.

niceguy2 Thu 29-Nov-12 10:05:55

Erm Leith I think you illustrate my point perfectly about over expecting.

Since the introduction of Chip & Pin, card fraud has dropped to it's lowest level for 11 years

Noone seriously expected it to drop to zero. But it was a pretty big improvement yes? Or in your world is it only worth doing if the benefits are absolute?

My OH works in the care industry and organises care for vulnerable people. They've never been busier and cannot get enough staff. So firstly it's unfair to say that due to government cuts they don't get any help. They may get less help than before but help is still there. Care is now having to be prioritised. Sometimes its a shame to have to tell someone who is lonely that they cannot provide the same number of hours as before when often the support worker is there almost acting like a friend. Other times it's having to tell someone that they must wipe their own backsides from now on. But my point is that help is still there and they are crying out for more care workers. The biggest issue my OH's company has is finding people willing to work the hours necessary since it's not a 9-5 job. Oh and travel. People don't like traveling around believe it or not. You'd probably shed a tear too at how many fail the aptitude test. With hard questions like "How much change do you expect from £20 if you buy £15.87 worth of goods?". Especially when they are allowed to use a calculator!

An issue (granted) is her company's insistence on using zero hour contracts for the first three months. This is mainly to protect the company from idiots getting through the interview stage. What they then do is just give those less/no hours. Hard workers who prove themselves practically get as many hours as they want and after the trial period they get a fixed contract.

So in this case my hope is that UC will encourage more people to apply for these sorts of jobs. Because god knows they need better quality candidates.

OutragedAtThePriceOfFreddos Thu 29-Nov-12 10:13:12

Niceguy, while I agree with your post and completely see your point, it's a sad fact that the care sector will not get an abundance of better quality job candidates until they stop paying peanuts. I realise they can't afford to pay more, but this is one area that I think the government does need to inject money into. Caring is a difficult job and people who do it need to possess a lot of skills to be good at it. It is very sad that this type of work attracts unskilled unqualified people who have no choice but to work for a pittance. Both the carers and the clients deserve better.

MiniTheMinx Thu 29-Nov-12 11:00:31

The last Job I did for the L.A was reassessing vulnerable people so their packages of care could be cut. This was 11 years ago now, this is not new, this started under labour sad

niceguy2 Thu 29-Nov-12 12:39:05

Outraged, I agree. Caring is a job for those with patience and empathy in their bucketloads. It's not something I could do at all.

The world has changed. We need to all work more flexibly. The era of jobs for life have long vanished. Full time work is/has diminished. Many of us have second jobs now. Rightly or wrongly those are the facts on the ground.

So it only seems logical to me that the benefits system adapts along with us. One of the most common stumbling blocks to recruitment for my OH's company is that people cannot work on 0 hour contracts because they'd lose their benefits and if work dried up, they'd have a huge delay not to mention complication in getting their new application going.

I'm sure there are no shortage of good people out there who could work and would be willing to as long as they didn't face a suicidal cashflow issue if things didn't work out.

UC won't be perfect but it seems from what i've read a step in the right direction. I'm not wholly convinced that in practice it won't go tits up thanks to government track record's on large IT projets but that's another subject entirely.

Wallison Thu 29-Nov-12 12:39:46

Indeed - stop paying peanuts and stop it with the zero hours contracts. There is plenty of money to be made in care work - it's just that the people who actually do the work don't get to see it.

Back to UC, this:

^it could also affect employees who receive below the minimum wage, hitting the poorest workers the hardest (however no legal workers should be earning below minimum wage, so only illegal workers would be affected).

is what I was talking about. It doesn't only affect illegal workers but also part-time workers ie the underemployed ie the poorest section of the workforce.

Wallison Thu 29-Nov-12 12:40:56

I should imagine another issue for your OH is that people don't want to work zero hours contracts full stop because the people who use them are crap and exploitative.

TheOriginalNutcracker Thu 29-Nov-12 12:44:53

I was discussing this with a friend yesterday. I think a hell of a lot of people are going to end up in serious trouble with their rent.

I currently get mine paid straight to the landlord and prefer it that way. However, I will pay it straight to the landlord when it is paid to me too, but I know people that just will not manage with this and will blow it all.

We also said, what about kids who's parents blow all of the money as soon as they get it ? What will they do for food for the rest of the month ??

TheOriginalNutcracker Thu 29-Nov-12 12:45:49

Don't get me stared on zero hour contracts. Bloody useless to anyone except students.

Wallison Thu 29-Nov-12 12:49:34

Zero hours contracts should be made fucking illegal. If you have such poor management skills that you don't even know how many man-hours you need each week, you shouldn't be in business. And as for the point about weeding out weaker applicants, why not just have a proper interview process in the first place? Again, another sign of poor management skills.

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