Submission: House of Lords' Economic Affairs Committee inquiry into Universal Credit

By: Stephanie Kleynhans  Published: March 2020


Summary

  • This evidence was submitted by Shelter in response to the House of Lords' Economic Affairs Committee's inquiry into the economics of Universal Credit.
  • More than 4.7 million people came to Shelter last year for help with housing and homelessness problems across England and Scotland.
  • Many of those who used Shelter services required help with Universal Credit (UC) or need to make a claim to help with their housing costs. We also help people who need somewhere temporary to stay or assistance to avoid homelessness.    
  • Through our services, and our wider research and policy work, we have gathered evidence about how UC is working for those with housing needs.
  • Our work demonstrates that there are many concerns with how Universal Credit is affecting those on low incomes and that its original objectives have created unintended consequences that are detrimental to people’s lives.
  • The five-week wait and the high rates of deductions through the third-party deduction system are causing huge problems for people on UC. The biggest problem is the inadequate levels of Local Housing Allowance (LHA), which is how the housing element for those renting privately is calculated.
  • This is impacting families’ economic resilience and is pushing people towards debt, poverty and homelessness.

Recommendations:

  • Ending the benefit freeze by lifting the rates by 1.7% has not been sufficient to match the true cost of renting. To help prevent debt and homelessness the rates must be realigned to cover at least the 30th percentile of local market rents as a matter of urgency.
  • The five-week wait at the beginning of a UC claim should be abolished completely.
  • The rate at which debts are deducted from a UC claim should be as low a percentage as possible. The rate should be based on an individual’s ability to pay and their individual circumstances at an absolute maximum rate of 10%.

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