Universal credit 'leaving families depressed' in poorest London borough

Low-income families in London’s poorest borough say that moving on to universal credit has left them financially worse off, caused parental conflict, stress, and feelings of guilt at not being able to provide for their children, according to a study.

Researchers found the squeeze on household budgets from universal credit meant many parents struggled to buy warm clothes and nutritious food for their children, as well as being unable to afford birthdays, toys and school trips.

Parents said the financial pressures provoked rows with partners, stress and depression. Many cut out eating or buying clothes to try to ensure their children did not go hungry, while others switched off the heating.

The research, carried out by the Child Poverty Action group (CPAG) for Tower Hamlets council in east London, found the stress and indignity triggered by universal credit was exacerbated by the complexity of the online benefits system and the frequently erratic payment system.

CPAG’s chief executive, Alison Garnham, said: “As a society we believe it’s right to have a social security system that protects people from poverty and helps them to get better prospects. But this research shows that universal credit isn’t achieving those aims.”

Tower Hamlets, which includes Docklands, home to major banks and corporations, has pockets of extreme wealth alongside extreme deprivation. It has the highest level of child poverty in London at 43%, as well as the second highest level of unemployment, and high rates of long-term illness. Universal credit has been in place there since 2017.

The notorious five-week wait for a first universal credit payment pushed many families into debt and food bank use to survive the loss of income. While a quarter took up the Department for Work and Pensions’ offer of an advance payment, almost as many got through by not paying rent, leading to rent arrears.

It found that some claimants, especially older people and those with poor English struggled with the system. Some had relied on their children to set up and manage their claim. Twenty-four per cent of those surveyed judged it “very or fairly difficult”. A third had no consistent access to the internet, in or outside the home.

Even some claimants who were used to the internet found it difficult to understand how universal credit worked. One told researchers: “Nothing is explained … you get no rules. You get no handbook, guidance, assistance. I’m not unintelligent and I’ve messed up the system. If someone is not IT-literate, they are screwed.”

All claimants interviewed by researchers said they had experienced universal credit payment errors, messing up their household budgets. One woman had £135 twice wrongly deducted because the DWP system had wrongly recorded that she was supposedly in receipt of maternity allowance – five years after she was pregnant.

When claimants contacted universal credit service call centres to resolve errors they encountered long call waiting times, and frequently rude and unhelpful staff. One respondent, re-interviewed six months later, said the service had hugely improved – “the on-hold times are now only around 10 minutes”.

Tower Hamlets council said it had uncovered 539 universal credit payment errors generated by the DWP in a year. A council benefits official told researchers that had a local authority service created a similar volume of wrong payments the service would have been put in special measures.

Despite being alerted to these errors, totalling hundreds of thousands of pounds, the DWP told Tower Hamlets it would not correct them unless the claimants themselves notified the department, meaning that residents continued to be either under-paid or over-paid benefits.

One council official said: “We have this scenario where it is like phoning the fire brigade and saying, ‘look, I can see out the window, there’s a block of flats on fire there’, and they [the DWP] go ‘yes, we can see it as well but we are waiting for the resident to tell us’”.

The research – based on interviews with clients and stakeholders, and a survey of universal credit claimants in the borough – found evidence that one of the central ambitions of universal credit – to encourage more claimants into work, or to work more hours – was not working because claimants felt they were better off on benefits.

A DWP spokesperson said its survey of 12,000 people nationally found more than 80% of claimants were satisfied with universal credit: “This report is based on the experience of fewer than 300 claimants, when more than 17,000 people are receiving universal credit in Tower Hamlets.

“Nobody should struggle to claim the benefits they need, and we have a wide range of support in place to help people, including our Help to Claim service delivered by Citizens Advice.”