Cost of living crisis: Experts demand universal credit overhaul

Campaigners are calling on the government to reform the universal credit system to ensure it keeps up with the cost of living crisis.

Figures from the Office for National Statistics (ONS) recently showed that food prices have surged at the fastest rate in 45 years, while consumer price index (CPI) inflation only fell very slightly in March to 10.1%.

A coalition of more than 90 organisations have written to the government warning that nine in 10 low-income households receiving universal credit payments are currently going without essential items.

They say the standard universal credit allowance for a single adult – £85 a week – is at least £35 a week below a conservative estimate of what's needed, according to research by the Joseph Rowntree Foundation (JRF) and the Trussell Trust.

“It is time to build a system that is needs-tested – where the support people get is linked to the actual costs of essentials to meet basic needs rather than the baseless system people have to suffer now,” the letter says.

Read more: Inflation slows slightly but food prices surge at fastest rate for 45 years

It adds: "We can’t always deal with what life throws at us on our own, which is why we need to have a system in place that supports us all to afford the essentials.

"This means ensuring that the basic rate of universal credit must at least cover life's essentials, with support never being pulled below that level."

The signatories, including Age UK, Citizens Advice, Mind and Oxfam GB, also warn that many universal credit claimants receive even less than £85, as deductions are "taken at unaffordable rates", for example, to pay off debts.

Read more: UK inflation: Why are food prices rising so much?

Citizens Advice recently shared a case study of a struggling mother-of-two to show how easily universal credit claimants can fall into debt as the government offers 'advanced payments' to help them put food on the table.

These loans need to be repaid, and as families struggle to keep up with soaring food, clothing and energy costs, they soon find themselves in a vicious circle.

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JRF principal policy adviser Katie Schmuecker said: “Every day sees another person’s circumstances change whether it’s losing their job, needing to care for a sick family member or ending a relationship.

"Our social security system is meant to give us peace of mind that the support will be there when we need it.

"But the price of food we all need to eat and the bills we all must pay are still too often outpacing the income of those on universal credit, many of whom will be in work.

"We must remind political leaders that, whether they like it or not, this is driving millions of people into hardship and it is not a problem that will go away without bold and concerted action."

Read more: Who is and isn't eligible for cost of living payments?

While soaring inflation from last year onwards as made the problem worse, the JRF warns that an "inadequate social security system" has been falling behind for years.

Research by the anti-poverty think-tank shows 2.4 million people experienced destitution at some point in 2019, up 54% since 2017.

The JRF says 69% of people in poverty would benefit from what it describes as an "essentials guarantee", while around 1.8 million people would be lifted out of poverty, including 600,000 children.

Yahoo News has contacted the Department for Work and Pensions for comment.