HomeWorld NewsBrits on Universal Credit should have billions of pounds of old debts WRITTEN OFF, experts say
Brits on Universal Credit should have billions of pounds of old debts WRITTEN OFF, experts say
BRITS on Universal Credit should have billions of pounds worth of old debts written off, experts have said today.
Nearly two thirds of people on the six-in-one benefits system (around 1.5million people) are struggling to repay historic debts which were slapped on them when they switched to it.
The Institute for Government warned that £6bn worth of debt dates back to overpayments of tax credits in the past.
And the think tank argues that the five week wait and historic debt payments risk damaging Universal Credit's reputation.
Ministers are urged to write off billions of pounds of debts from years ago, or slow down the repayments.
And experts recommended that ministers give a week week "welcome grant" to Brits coming onto Universal Credit from other benefits.
Many don't even realise they have such huge sums to pay back when they go over onto the flagship new system.
Some are averaging £5,000 in old debts when they swap over to the new system.
Former Tory leader Iain Duncan Smith told The Sun last night: "This historic debt is quite wrong, and they should write it off.
"It gives Universal Credit a bad reputation.
"As soon as they go onto it, suddenly they are getting it clawed back off them.
"Anyone moving onto Universal Credit should not carry this debt with them."
The report also argues that the five-week wait – which The Sun has been campaigning to cut down – is far too long.
Our Make Universal Credit campaign is calling on the Government to cut the wait, let Brits keep more of what they earn, and give them upfront help for childcare costs.
Nicholas Timmins, the report’s author and a senior fellow at the IfG said: "Universal Credit has a terrible reputation.
"But the reality is that improvements to it have been made and it is now working better.
"The two most pressing issues are that more needs to be done to ease the transition on to Universal Credit, and something must be done to tackle the enormous sums of old benefit debt that Universal Credit is being used to recover.
"Failure to do that will undermine Universal Credit’s effectiveness."
A DWP spokesperson said: "Universal Credit provides a vital safety net for people who are out of work or on low wages, with more than 2.8 million getting support.
"We have already made numerous improvements, and from July we will be paying an extra £200 to people as they move from legacy benefits to Universal Credit.
"There are safeguards in place to help people pay off debts through Universal Credit, while ensuring they still have enough to pay for housing and daily essentials."
What to do if you have problems claiming Universal Credit
IF you're experiencing trouble applying for your Universal Credit, or the payments just don't cover costs, here are your options:
Apply for an advance – Claimants are able to get some cash within five days rather than waiting weeks for their first payment. But it's a loan which means the repayments will be automatically deducted from your future Universal Credit pay out.
Alternative Payment Arrangements– If you're falling behind on rent, you or your landlord may be able to apply for an APA which will get your payment sent directly to your landlord. You might also be able to change your payments to get them more frequently, or you can split the payments if you're part of a couple.
Budgeting Advance – You may be able to get help from the government to help with emergency household costs of up to £348 if you're single, £464 if you're part of a couple or £812 if you have children. These are only in cases like your cooker breaking down or for help getting a job. You'll have to repay the advance through your regular Universal Credit payments. You'll still have to repay the loan, even if you stop claiming for Universal Credit.
Cut your Council Tax – You might be able to get a discount on your Council Tax or be entitled to Discretionary Housing Payments if your payments aren't enough to cover your rent.
Foodbanks – If you're really hard up and struggling to buy food and toiletries, you can find your local foodbank who will provide you with help for free. You can find your nearest one on the Trussel Trust website.
Yesterday it was revealed that thousands of Universal Credit claimants will be given a guaranteed one-off payment when they hit state pension age – fixing a loophole in the system.
Campaigners had argued that the flaw pushed some elderly benefit claimants into poverty by leaving them without money for up to nine weeks.
Under the new rules, the government says Universal Credit claimants who reach state pension age “will receive a run-on” of a one-off payment.
Secretary of State for Work and Pensions Therese Coffey says this will benefit approximately 200,000 pensioners over the next five years.
Each person will get an average of £350 from the one-off payment, she said, at a cost of £70million to the government.