Universal Credit and Foodbanks

The Trussell Trust has been monitoring the roll-out of Universal Credit, the largest welfare reform in a generation.

Universal Credit is not the only benefit people at foodbanks are experiencing issues with, but it is a significant factor in many areas.

The Trussell Trust has released a series of reports exploring the impact of the rollout and design of Universal Credit on claimants and foodbanks.

The next stage of Universal Credit

By 2019, the rollout of Universal Credit to all Jobcentres will be complete, and the next stage of Universal Credit will begin. 3 million people currently claiming other benefits and tax credits will have to move onto the system. The Trussell Trust is concerned that, given the links between Universal Credit, financial hardship, and foodbank use, this next stage could lead to increased financial need and more demand for foodbanks. The report uses referral data from Trussell Trust foodbank vouchers to examine the impact of Universal Credit on foodbank use.

Key Findings

  1. When Universal Credit goes live in an area, there is a demonstrable increase in demand in local Trussell Trust foodbanks. On average, 12 months after rollout, foodbanks see a 52% increase in demand, compared to 13% in areas with Universal Credit for 3 months or less. This increase cannot be attributed to randomness and exists even after accounting for seasonal and other variations.
  1. Benefit transitions, most likely due to people moving onto Universal Credit, are increasingly accounting for more referrals and are likely driving up need in areas of full Universal Credit rollout. Waiting for the first payment is a key cause, while for many, simply the act of moving over to a new system is causing hardship.

Learn more about The next stage of Universal Credit.
You can also download our full report in PDF format.

The research finds that Universal Credit is currently unable to provide a well-functioning service for some of the people in our society most in need of support, leading to an increased burden on the third sector. Poor administration, the wait for the first payment, and repayments for loans and debts are driving some people to severe financial need. This is particularly acute for families with dependent children and disabled people. A true Universal Support system and more financial support can turn the tide to make sure Universal Credit can achieve its principles whilst still maintaining a robust safety net for people when it is most needed.

The findings from the report come from a survey of people referred to foodbanks in The Trussell Trust’s network, delivered by foodbank volunteers and managers in 30 foodbanks in areas of full Universal Credit rollout in England, Scotland, and Wales, between February and March 2018.

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56% had experienced issues with housing

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8% of respondents said their full Universal Credit payment covered their cost of living

57-percent@2x

57% had experienced issues with mental or physical health

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5% of people who said they were disabled or had ill-health said their full Universal Credit payment covered their cost of living

Key Findings

  1. The wait for a first payment had severe and immediate consequences: 70% of respondents found themselves in debt, 57% experienced issues with their mental or physical health, and 56% experienced housing issues. The majority of respondents were waiting or had waited the intended weeks for their payment but this wait still had severe financial implications.
  2. There was little statutory support available during this wait. 63% were offered no help, while the most likely form of help offered was a foodbank voucher. Advance payments were helpful for some, whilst a half who provided detail said they were unhelpful, too little, or unaffordable to repay.
  1. Only 8% said their full Universal Credit award covered their cost of living. This was even less for disabled people or people with ill-health, of whom 5% said the award covered their cost of living.
  2. Poor administration was a persistent concern. 35% had waited, or were waiting, longer than 6 weeks for their first payment. A third had experienced poor communication, and 30% had experienced underpayment. Over and underpayment were particularly rife amongst those in work, with 50% in work affected.
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70% had experienced debt during the wait

40-percent@2x

40% cited repayments as an issue whilst on Universal Credit

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  Only 8% were offered any kind of support from the JobCentre or local authority during the wait for the first payment

33-percent@2x

 a third cited difficulties keeping up with requirements

Recommendations

  1. Local authorities should provide a true Universal Support service which: supports people transitioning onto the service or making a new claim; expands support for people with the greatest financial need; and extends beyond the initial claim or transition.
  2. People should have longer to repay advance payments, and more frequent payments and payments direct to landlords should be offered to all in financial need or at risk of financial need.
  1. Uprate benefit payments in line with inflation, run-on Employment and Support Allowance payments during the wait for the first payment, and restore the work allowance to pre-April 2016 levels.
  2. An urgent inquiry into poor administration within Universal Credit and its effects, particularly in relation to insecure work.
  3. More flexibilities for requirements, particularly for disabled people and people with ill-health, and a yellow-card warning system for sanctioning.

The Left Behind: Is Universal Credit Truly Universal?  full report is available for download.

In April 2017 we published our report Early Warnings: Universal Credit and Foodbanks, shedding light on some of the impacts of the transition to Universal Credit (U.C.). The report found that foodbanks in areas of Universal Credit rollout were finding people referred to them were falling into debt and mental health issues as a result of the six-week wait for the first payments. Many foodbanks’ operations were stretched due to increased demand, with volunteers acting either as welfare advisers or too busy giving out food to offer a listening ear and signposting.

We used the findings to suggest practical ways in which any adverse side effects of U.C. roll out could be mitigated.

  • Universal Support: More information about the shape and form of Universal Support locally, particularly ahead of full UC rollout in an area, would bring welcome clarity to foodbanks.
  • 6-week wait: A reduction of the initial six week waiting period for U.C. would make a significant difference to people’s ability to cope with no income. The 7-day unnecessary ‘waiting period’ before the assessment period begins could be reduced first.
  • IT & flexibility: More flexibility in the administration of U.C. is needed to support people moving onto the new system. For example, more support for people applying online who are unfamiliar with digital technology, and support to improve people’s ability to move into work and stay in work.
  • Conditionality: Continued monitoring the impact of conditionality, in particular in-work conditionality, which has been linked to increased foodbank use.

More recently, we have advocated for a pause in the roll-out, better availability of affordable advance payments, and welcomed changes to the cost of calling the Universal Credit hotline and reductions to the six-week wait. We have also submitted evidence to the Work & Pensions Select Committee inquiry on Universal Credit, which can be found here.