More benefit claimants are having to borrow money from family, friends, payday lenders, banks and credit unions to make it through the month under Iain Duncan Smith’s controversial universal credit scheme, a survey has shown.
The first review of pilot projects found 34% of people are resorting to asking for money from other sources under the new system, which rolls all benefit payments into a lump sum – up from 19% under jobseeker’s allowance.
Claimants are now paid monthly rather than weekly, in a system that ministers claim will foster more responsibility and budgeting skills.
However, the number resorting to payday lenders, bank overdrafts, credit unions and advances from the government has risen under the new system, according to the telephone survey of 901 new claimants in Ashton-under-Lyne, Wigan, Oldham and Warrington.
The research showed claimants are spending twice as much time looking for jobs under the new system, carrying out searches for 27 hours per week on average compared with 13 hours under jobseeker’s allowance. Claimants are also applying for more jobs in a week, typically submitting 16 applications, while those in receipt of jobseeker’s allowance apply for 11. And 84% were confident of finding work in the next three months, compared with 76% of jobseeker’s allowance claimants.
However, 13% of people claiming online found the website crashed, 9% were confused by the instructions, 9% had difficulty getting the information required, 10% said it took too long and 27% did not manage to complete their application on the first attempt.
The survey did not ask how many people had actually got new jobs under the stricter universal credit scheme, which is being rolled out slowly amid problems with IT systems and management of the programme.
Rachel Reeves, Labour’s shadow work and pensions secretary, said: “The urgent question the government needs to answer on universal credit is whether more than a handful of people will ever be claiming, and how much more money will be wasted beyond the £140 million already written off due to DWP chaos. This report tells us nothing about that.”
Despite the evidence of more people having to rely on borrowing, the government pointed out that 78% feel confident about managing their monthly spending. However, only a third think being paid monthly is more convenient.
Iain Duncan Smith, the work and pensions secretary, said: “Under universal credit, we are beginning to see a cultural shift where people choose to work rather than rely on state support.
“It is great that claimants are getting the help they need from our Jobcentre Plus advisors and that they feel confident about managing changes such as monthly payments.”
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