The poverty trap

The Universal Credit helpline will be closed for seven out of ten days over the Christmas holidays. During that time, if you need assistance with a claim – even if you desperately need the money to buy food for your children or to pay for heating as the temperature drops, or if you have an emergency – you’re on your own.

The helpline has been plagued by problems since its launch. Trained advisers talk of an opaque unwieldy system, seemingly set up to work against them, while, until recently, anyone calling the 0345 number from a mobile phone faced charges of 55p a minute.

Jeremy Corbyn led on the matter at PMQs, forcing the UK Government to announce the number would be free to call by the end of the year, with the budget then bringing further concessions from the Chancellor – namely, the decision to reduce the six-week waiting time at the start of any new claim by a week.

The UK Government had been under sustained pressure over the wait, and eventually something had to give. As Labour MP Frank Field put it: “Universal Credit’s design and implementation have been beset with difficulties that knock claimants into hunger, debt and homelessness, but the most glaring of these in the first instance is the six-week wait for payment.

“I doubt many households in this country could get by for six weeks, and for many, much longer, with no income, never mind those striving close to the breadline. The baked-in wait for payment is cruel and unrealistic and government has not been able to offer any proper justification for it.”

However slight the concession, the move relieved pressure on Philip Hammond and his colleagues in the Department for Work and Pensions. But behind the scenes, problems continue to mount.

Under the new system, direct deductions from benefits, made to cover debts such as rent arrears, can be as high as 40 per cent. The deductions, to cover money owed to utility companies, housing providers, councils and others, stretch tight budgets even further, pushing people into debt and, according to charities such as StepChange, often forcing them into taking credit elsewhere.

And while claimants can end up confused over what direct deductions from payments are paying for, with the rollout of Universal Credit full service, representatives from organisations such as Citizens Advice have been restricted in their ability to represent clients.

Under the previous system, an adviser could call up DWP staff and make representations on someone’s behalf, but under the new regime, with implicit consent removed, clients must now provide explicit consent to have a representative access specific information relating to their claim.

Citizens Advice Bureaux (CAB) staff have warned the change will make it harder for them to do their jobs.

As one adviser put it: “I was advised by the UC Helpline that UC staff will no longer speak to representatives if the customer is not present. This will make life difficult for CAB personnel who have been contacted by phone by a client who has a problem that s/he has been unable to resolve. To have to ask them to come to the CAB just to confirm that it is OK to speak to a CAB member – especially if client has already signed a DWP authority – is unreasonable.”

Facing criticism, the UK Government agreed to grant MPs implicit consent. But that has not been extended to advice organisations, or even to MSPs.

Anecdotal evidence clearly suggests the removal of implicit consent will present another barrier to those seeking to navigate the system. In one case, a local CAB had a client who was in hospital with pneumonia when their first appointment was scheduled. Her partner went along to the Jobcentre in her place to explain the situation, only to be told that she still had to phone UC and explain her missed appointment from hospital. The client’s nurse then phoned on her behalf, but this was unacceptable to UC, meaning that, finally, the client had to go to the phone in hospital to explain that she was too ill to attend the appointment.

In fact, Citizens Advice had been broadly supportive of policy, at least in principle, when it was first put forward. But concern grew, eventually culminating in the organisation calling for the rollout to be paused while problems are addressed.

Rory Mair, chair of Citizens Advice Scotland (CAS), told Holyrood: “We were never against the idea of combining six benefits into one and making it simpler for people to get the benefits that are their right. I suppose there was always a worry that there was another agenda going on here – that somewhere or other, another policy objective of this was to take money out of the welfare system, and people would get less money. But as an overt statement of policy, the idea that you would take six benefits into one didn’t seem bad.

“But we have been clear all along that that was always going to be very difficult. So rolling it out, experimenting in areas and seeing what the reaction was, and then being willing to amend, was the right thing to do. We felt that was quite a mature route for a big change in public policy. Where we came apart a bit is that, from rolling it out in certain places and hearing with such unanimity about the problems it was causing, the idea that people would respond by altering it didn’t seem to be working quite as well as we would have wanted.”

He added: “Our biggest worry with this is that although there has been a suggested reduction in the time wait, any period of time that people who are maybe in receipt of multiple benefits have to wait is going to cause them extreme distress. Remember, the real benefit to this change is for those people who are on four or five of those benefits.

“If you were just on one then you only applied for one benefit anyway and you still only apply for one benefit, the real advantage of this change applies to people on multiple benefits – in other words, the most deprived people and the people most likely to be in poverty. So it has really got to work for those people and our worry is that a four-week wait will still cause people real distress and, if to cover that distress, we’ve then got to help to arrange a crisis payment to them, which is then lopped off the benefit they get, you’re not really alleviating poverty with that, what you’re doing is simply starting a cycle that people will never get themselves out of. If you have to pay back money from a crisis payment, and it just gets taken off the benefit they get four weeks later, then they just won’t have enough money four weeks later.

“We still have those concerns, and we’ve also still got concerns that people seem to think it’s an easy job for folk to go on multiple benefits, but people are having to make real choices between paying rent, buying food, heating their houses and looking after their kids, and this is not, in and of itself, going to take people out of poverty.”

These reservations were shared by local authorities and charities, as well as each of the UK’s four children’s commissioners. The Scottish Government too has expressed grave reservations over the effect of the reforms.

Social Security minister Jeanne Freeman told Holyrood: “In policy terms, the wait before the first payment is, in our view, unnecessarily long. In addition, of course, the UK Government has frozen the benefits taken in under Universal Credit for the past two years, since the 2015 Budget, and that and the reduced benefit cap of £20,000 is pushing more and more people and families, very many of whom are in work, into increased hardship and rising debt.

“In addition, the drive to deliver at any cost means that the system itself is being pushed too hard and not given the time to sort out the delivery issues, and one of the most heart-breaking of those is the impact on those who are terminally ill that our colleagues in Holyrood and Westminster have highlighted.

“It is inexcusable that the UK Government refuses to listen and ploughs on regardless of the damage it’s doing to people’s lives.”

But the concerns touched on by Freeman and Mair do not exist in a vacuum. In fact, just as anti-poverty campaigners warn of a failing welfare system, concern is growing over the number of people in work, yet unable to support themselves. The safety net provided by the welfare system is full of holes, and more and more people are in freefall.

In a recent report, the Joseph Rowntree Foundation (JRF) found that almost 400,000 more children and 300,000 more pensioners in the UK were living in poverty last year compared with 2012-13. It was the first sustained increase in child and pensioner poverty for 20 years.

JRF found that Scotland has made progress in reducing poverty over the last 20 years, and in some ways the findings provided grounds for optimism. It found a lower level of poverty in Scotland than in the rest of the UK, and that drops in poverty among pensioners and families had been sharper and more sustained.

But even if Scotland scores more favourably than the UK overall, the report highlighted far more troubling aspects, with 37 per cent of the lowest income families spending more than a third of their income on housing – up from 24 per cent in 1997 and rising even more sharply in the last ten years.

Meanwhile most people in the poorest fifth of the population in Scotland do not have any savings or investments, and are not building up a pension, and although poverty has fallen over 20 years, recent signs suggest progress could be undone.

In the three-year period between 1994 and 1997, 23 per cent of the Scottish population lived in poverty. And though the rate fell to a low of 18 per cent between 2008 and 11, remaining pretty stable until 2012-2015, in the last few years there has been a slight increase, with 19 per cent of Scots living in deprivation.

But perhaps most troubling for policymakers will be the rise of in-work poverty, and the growing acceptance that, in modern-day Scotland, having a job isn’t enough to provide security. Depending on the measure taken, the UK is somewhere between the world’s fifth and ninth biggest economy, yet there are people with jobs who are struggling to get by day-to-day.

In fact, according to research by the Institute for Fiscal Studies, the majority of children living in poverty are part of working families. Median family earnings (before tax) in one-earner couples with children are 11 per cent lower in real terms than 20 years ago.

More worryingly for anti-poverty campaigners, the IFS found that raising living standards and reducing poverty rates among one-earner couples with children could “prove challenging”, with the vast majority of the working parents in these families already working full time.

Fuel poverty rates declined by about four percentage points in 2016, according to the Scottish House Condition Survey – equivalent to 99,000 fewer households living in fuel poverty compared to 2015. The results revealed fuel poverty at its lowest since 2005/06, yet 26.5 per cent of Scottish households – around 649,000 homes – exist in a state of fuel poverty. But with the drop driven by lower energy prices, rather than a rise in real terms earnings, any progress could be ephemeral.

And while concerns about housing, fuel and food costs have mounted in the last year, stories have continued to emerge of women, facing household budgets which are incapable of covering the essentials they need to survive, being unable to afford sanitary products.

Women across Scotland are being forced to choose between eating and buying tampons, and between heating their homes and clothing their children. Left with no other option, they have been left to improvise with tissues, or rags, or even socks.

The scandal led the Scottish Government to trial a £42,500 pilot aimed at providing women in Aberdeen on low incomes with free sanitary products, while Labour MSP Monica Lennon has also launched a member’s bill which, if successful, would see schools, colleges and universities offering free sanitary care in their toilets.

Launching her bill, Lennon said: “Access to sanitary products should be a basic right, but sadly in Scotland we know not everyone can afford or obtain what they need.

“That’s why I intend to introduce a legal duty on the Scottish Government to develop a universal system in Scotland which will provide free sanitary products for anyone who needs them.”

She added: “This is a big step towards creating a fairer and more equal society and I hope to hear from people right across Scotland during the consultation.”

It was this drive to make a fairer country, to take a different path to the one pursued by the UK Government, that drove campaigners to call for greater devolution of welfare powers to the Scottish Parliament.

The Smith Commission handed control of 11 benefits to the Scottish Government, with the Social Security (Scotland) Bill – currently working its way through the Scottish Parliament – providing the framework for a new, Scottish social security system. And so, on the face of it, Scotland has the opportunity to build something better. Yet creating a new system to exist within and alongside the UK one is no easy task.

Freeman told Holyrood: “Our first priority is to make sure that these 11 benefits are transferred safely and securely so that every one of those 1.4 million people continue to receive the financial support they are entitled to, at the right amount and on the day they expect it. Building this new public service is both challenging and complex, particularly because it is only a part of the UK welfare system that we will be responsible for and so there is both a significant degree of interdependency between what will be transferred and what will remain a UK Government responsibility, and a great deal of collaborative work is needed with the UK Government to ensure we receive the robust data and information we need to make sure the transfer happens safely.”

So to what extent can the new social security system tackle poverty in Scotland?

Freeman said: “By the end of this decade, the UK Government will have cut £4 billion a year in welfare spend in Scotland. These savings are not passed on and only 15 per cent of UK social security spend in Scotland is being devolved so, clearly, we can’t fix everything that’s wrong with the UK system – much as we would like to.

“But the benefits we will be responsible for can contribute alongside other measures this Scottish Government has been taking for a number of years to support those on low incomes. For example, since 2013 we’ve spent £100 million a year on mitigating the worst effects of the UK welfare reforms including fully funding the bedroom tax, providing Discretionary Housing Payments to help with benefit cap and Local Housing Allowance changes, and through our Scottish Welfare Fund. 

“We have also begun a national and local campaign to increase benefit take up, [which is] not something the UK Government is doing. It’s estimated that, in 2014/15, for tax credits and the main income-related benefits, there could be over 500,000 cases of individuals or families in Scotland not claiming benefits they were entitled to. That is 500,000 people who could be better off – and that is just one benefit.

“Our benefit campaign work will continue throughout this parliament, encouraging people to receive the financial support they are entitled to and challenging the unwarranted and damaging stigma around social security that the UK Government not only allows to go unchallenged but arguably reinforces through its policies and actions.”

Whatever approach the Scottish Government takes, something, clearly, needs to change. Poverty used to be seen as a problem caused by unemployment, but with growing numbers of people working full time, in an advanced economy, yet unable to survive, Scotland may well need to reconsider the role of the welfare system on a more fundamental level.

As Mair put it: “It’s not a problem of people being scroungers, it’s that with the economy the way it is and with the circumstances people find themselves in with regards to disability or other circumstances, many people will simply, no matter how hard they try, not be able to get enough work to support them and their families.

“These are not just people sitting around waiting for handouts, they are people who have gone and found work, but it doesn’t pay them enough to support their families. This is about rights, not charity, because people have a right to these benefits. What we are trying to do is get people enough resource so that they can have a life that’s not in abject poverty.”