Universal Credit in Crisis: Hundreds of families in Preston hit by benefit caps

Charities claimed the restrictions have added to the misery of those teetering on the poverty line, with nearly all of those affecting having children.

Some 338 families have had their housing benefit capped in the city since new limits were brought in back in April 2013, figures from the Department for Work and Pensions (DWP) show.

The majority of claimants – almost seven in 10 – were single parents.

He said: “When your benefits can’t cover both rent and food you end up having to choose between the two.

“Lone parent families tell us how they can’t afford to feed themselves and their children, let alone cover childcare and think about returning to work. The system is entirely self-defeating.”

Scrapping the cap, raising housing benefit rates and fixing structural issues that “push so many perilously close to the trauma of homelessness” would overhaul the system into one fit for purpose, he argued.

Single adults and lone parents whose children do not live with them have lower limits. Some people are exempt from the cap, such as those receiving tax credits or claiming carer’s or guardian’s allowances.

Over the six-year period, 30 households in Preston were docked more than £100 a week.

More than 204,000 households in Great Britain have had their benefits capped since the limit was brought in, 62 per cent of whom were single-parent families. These include 17,338 in the North West, where single-parent families accounted for 63 per cent of cases.

The chief executive of the Child Poverty Action Group charity, Alison Garnham, said the statistics “expose the absurdity and incoherence” of the benefit cap policy.

The “arbitrary” limit punished single parents with young children for being unable to work, giving them insufficient financial support to live on, she added.

“Our social security system should be there for people when they need it most and this is just one example of a number of harsh measures that together keep children trapped in poverty, unable to enjoy a childhood full of opportunity and free of disadvantage.”

A spokesman for the DWP said: “The benefit cap provides fairness to the taxpayer while ensuring there’s a safety net for the most vulnerable.

HAVE BENEFIT CHEATS FOUND A LOOPHOLE IN THE SYSTEM?

Universal credit was seen as the way forward in the battle against Britain’s multi-billion pound benefit fraud crisis.

Before its announcement in 2012, the government had been fighting an army of fraudsters who had been successfully scamming the nation’s old ‘complex’ benefits system to the tune of £3.2bn a year.

Speaking at the time, the then-welfare reform minister Lord Freud said universal credit would “revolutionise” the UK’s welfare process and clampdown on cheats hoodwinking the system.

“Universal Credit will dramatically reduce the chances of fraud entering the system,” he insisted. “It will cut down on error as it will be much easier to understand and administer.”

But embarrassingly, within a month of its launch, claims were already swirling that benefits cheats had found a glaring loophole in the system.

Scammers were said to have targeted the ‘advance payments’ on offer to the poorest families in a fraud that reportedly cost upwards of £100,000.

The payments were meant to help those in need of urgent cash to cope while waiting for the new handout to be set up.

But instead, fraudsters found they could go online and claim thousands of pounds for children and housing costs without giving any proof.

It sparked an investigation by the Department for Work and Pensions (DWP) and came after a stern warning from MPs sitting on the public accounts committee, which oversees government spending.

In a major report, the committee said the DWP’s’ “understanding” of the “level and causes fraud and error” in the new system was “incomplete”, before recommending a ‘robust’ method for estimating fraud and error was agreed before the welfare’s rollout began.

A spokesman for the DWP said it remained “vigilant to all forms of fraud” and would “investigate, and prosecute, where appropriate”, adding it was “constantly refining” things.

'I DON'T FEEL THERE ARE MORE SAFEGUARDS'

Legal experts have raised their concerns over Universal Credit but insisted it was “too early to tell” if would become an easy target for benefit cheats.

It comes after concerns were raised about the haphazard data-gathering process of the new benefits system.

Keith Hollywood, head of benefits at Moss and Co Solicitors, which specialises in defending people charged with alleged benefit offences, had his reservations about the system and did not rule out it becoming a potential target for fraudsters.

“I think it’s going to take quite some time yet before the teething problems are sorted out and we see whether or not it’s a better benefit system than they one it has replaced,” he said.

“We haven’t seen anybody charged with benefit offences in relation to universal credit yet.

“I suspect that this is because it’s a very new benefit. There are a lot of areas that still have to be filtered through and benefit investigations can take a long time.

“It’s too early to tell what risk there is at the moment.”

Asked if he felt universal credit was more stringent in its security than previous benefit systems, he said: “I don’t think it is. I don’t feel there are more safeguards.”

Mr Hollywood, whose firm is based in London, said his biggest concern about the system was the number of people falling into rent arrears due to delayed payments.

Mr Hollywood said this was a common concern he had experienced at conferences with other solicitors and representatives of local councils.

“This figure doesn’t surprise me at all,” said Mr Hollywood. “The biggest complaint is the lapse in time before payment. That’s the main concern.”

'THE UNIVERSAL CREDIT PROBLEM CAN'T BE SOLVED WITHOUT MORE MONEY'

Professor Peter Taylor-Gooby, professor of social policy at the University of Kent, said: "Most experts agree that Universal Credit is a good idea. It simplifies claiming by amalgamating six existing benefits into one payment and supports those on benefit into work through top-ups to low wages.

"Yet the evidence of failure is now so great that Amber Rudd, Secretary of State for Work and Pensions, admitted in February that Universal Credit was giving rise to greater poverty and increased use of food banks. She postponed the national roll-out - the fifth such delay - until 2024.

"In the areas where Universal Credit is already in place, rent arrears and severe debt problems are rising much faster than elsewhere. The problems arise for two reasons.

"First, there simply isn’t enough money. George Osbourne’s 2010 Emergency Budget cut benefit spending on people of working age by about £12bn, or one-fifth, through stricter uprating, housing benefit restrictions, benefit caps and a more stringent calculation of Universal Credit entitlement.

"These cuts feed through into the new benefit system.

"Secondly, the new benefit depends on a computer system that can update payments in real time, so the amount people get responds to changes in their needs. The system has repeatedly failed to achieve this target. Benefit payments for those in the experimental scheme are often in arrears and claimants find it almost impossible to work out how their benefit is being calculated.

"What can be done? Going back to the previous system would not solve the problem, since the benefit cuts since 2010 would continue to impoverish people.

"There is no alternative to a serious injection of new money, targeted at remedying some of the most serious cuts.

"This could involve an overall backdated benefit uprating in line with RPI, abolition of benefit caps and improvements in Universal Credit as a ‘top-up’ to low wages to reduce the impact of ‘poverty traps’.

"This would ensure that the most vulnerable families can share in the end to austerity announced by the Prime Minister in her conference speech last October.