The number of people claiming Universal Credit shot up in April – the first full month of lockdown – to 2.1 million. That’s a 69.1 per cent rise in one month, and 856,500 more claimants to the relatively new welfare system.
This spike comes as separate figures show a rise in unemployment to 1.35 million in January to March: an increase of 50,000 on the same period last year.
Universal Credit is a reformed benefits system introduced under the coalition government, designed to mimic salaried employment via monthly payments into one household bank account, with the stated aim to “make work pay”.
This design jars with a period of rising unemployment, when it is even harder to transition back into work after a brief stint on benefits during a blip in your working life. The jobs and hours just aren’t there. In the last two weeks of March, the total number of weekly hours worked saw the largest drop in a decade, and a quarter fewer hours were worked in the last week of that month than in any other weeks in the same quarter.
Plus, the new welfare system is already beset with problems. A five-week wait for the first payment is built into the system – a design that has caused rising foodbank use, and now leaves people for over a month without income in a pandemic situation.
There are other problems too, exacerbated by the coronavirus crisis. The in-built benefit cap and two-child limit makes it harder to live on as the cost of living rises, at a time when the prices of household essentials are inflating.
Default single household payments increase the risk of entrapment in an abusive household, a threat heightened by lockdown, which forces people to spend most of their time at home. There are other examples of problems in the system, which we have reported on previously.
In anticipation of more people relying on benefits, the government did tweak the system to make it more generous at the start of the crisis. It increased the standard allowance – the monthly baseline every household receives – by £1,000 (upping payments by around £20 a week) for all new and existing claimants for 12 months.
It has also removed the minimum income floor (a calculation set at the national minimum wage, based on how many hours self-employed claimants have worked) to ensure higher payments for those who are self-employed but unable to earn in this period.
The requirement for face-to-face Jobcentre appointments and sanctions as punishment have also been lifted for those affected by coronavirus.
Yet the five-week wait and other pre-existing design problems remain, for hundreds of thousands more people to discover.
Those who have fallen through the cracks of the government’s emergency self-employment help and Job Retention Scheme are finding they have to run down their savings before receiving the only state income support left available to them – as Universal Credit disqualifies those with more than £16,000 worth of savings. This is one of the many restrictions the Labour party is urging the government to remove.
As more and more people who had never had to claim benefits before interact with this system, its flaws will be increasingly exposed – and become more of a political headache for the government.