Universal Credit & ‘austerity’ increase “welfare spend”

Today the Guardian runs an article about the non take up of welfare benefits and says:

Almost half of families on low incomes are going hungry by not taking up benefits, we learn today. But for this government, it shows social security isn’t needed

Yet the problems with this claimed Guardian scoop  – the we learn today bit highlighted above are firstly that I said all of this in minute detail and with official sources and with official figures that are much higher than this errant piece almost 11 months ago here.

Secondly that the Guardian still don’t get the much bigger issue – that it means Universal Credit CANNOT WORK EVEN IN THEORY!

Here is how I titled the piece on 25 June 2015 almost 11 months ago and all the easy to follow detail is there.

£66 MILLION OF WELFARE UNCLAIMED EVERY DAY IN THE UK

ukcoins

The £66 million per day that currently goes unclaimed and which is £24 billion per year will have to paid in UC to those who currently do NOT claim!

Universal Credit in theory

This government and most of the Labour benches led by Frank Field love Universal Credit and hundreds of other commentators laud its theory too, yet what they all fail to recognise is the current pre Universal Credit non take up rate of welfare –  the welfare benefits and tax credits that people are now entitled to yet fail to claim.

Currently the system sees three routes to ‘welfare’ (social security benefits and tax credits) in the list below and claimants have to contact all three routes separately:

  1. HMRC for tax credits
  2. DWP for most social security benefits, and
  3. Local councils for Housing Benefit

Universal Credit replaces these three routes with one route – Universal Credit.

UC only has one claim which guarantees to pay ALL the ‘welfare’ the claimant is entitled to because of this sole route.  This means that ALL tax credits, ALL social security benefits and ALL Housing Benefit that the claimant is entitled to will be paid

A 100% payment of all the claimant is entitled to with one claim, whereas currently, a claimant could be in work and believe – as many do – that they are not entitled to tax credits or to Housing Benefit, yet they often are as this simple table I devised from the official figures a year ago reveals:

take up table unclaimed 2013-14

The above is the simplest of tables which shows how much in just 4 social security benefits the DWP admits people are entitled to, yet fail to claim and in the range for just these few benefits of £11.994 billion to £15.657 billion per year.

Given Universal Credits one stop assessment system it means that UC will have to pay out every penny that every claimant is entitled to – the £11.994 billion to £15.657 billion above which means the overall welfare bill will increase by this amount.

THEN and additional to that there is the last official estimate of £8.34 billion per year of Working Tax Credits and Child Tax Credits that also claimants are entitled to yet do not currently claim.

THEN the additional social security benefits not stated in the table above which also go unclaimed need to be added and we see that Universal Credit means the overall ‘welfare’ bill will increase by way over £20 billion PER YEAR – and over £20 billion per year even after the latest cuts to Working Tax Credits under UC and other UC cuts.

Yes that does mean in theory as well as in practice that Universal Credit is the biggest financial cock up that any government has ever made in terms of welfare cuts.

Some readers may recall I have said that Universal Credit MUST FAIL even in theory because the government failed to consider the current non take up rates of social security benefits, housing benefit and tax credits many times before.

I have just checked and I first stated this argument in January 2012 here and that is way over 4 years ago and nobody has ever contradicted my argument … because it is true.

So two very quick and related questions to consider in closing:

  • Every time anyone says UC is great in theory and whoever they are and from what political party they are in, they are talking through their rectum.
  • In the run up to the last general election in May 2015 and ever since recall all the horrific impacts of the stated £12 billion cuts in welfare the Tories want to achieve.  Then realise that as the overall welfare bill will increase by over £20 billion per year because of the monumental UC cock up above and this political bullshit called austerity simple cannot work can it?

 

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6 thoughts on “Universal Credit & ‘austerity’ increase “welfare spend”

  1. Unfortunately these figures are just wrong:
    1. they include both Pension Credit and unclaimed Housing Benefit for pensioners neither of which are included in Universal Credit
    2. the only under claim which is automatically dealt with by UC is the underpayment that arises when people claim one benefit that is wrapped up in UC but not another – most typically when someone claims HB but not Tax Credit, or vice versa. People who claim neither will not be affected by UC because they probably won’t claim that either
    3. the underpayment figures are before the £4 billion in UC cuts, which started to impact this week. Because UC is now much less generous than predecessor benefits the reduction in underpayment will be correspondingly less. The widened benefit cap, from October, and the two child limit, from April 2017, will further reduce underpayments, by making UC still less generous.

    It is also untrue to say that the government have overlooked this. They have always said that UC will lead to an increase in expenditure precisely because it will reduce underpayments. Their estimate of the extra expenditure is £2billion. Of course there remains a risk that UC will be so popular and widely claimed that it will cost more than this, and some people who should know better have supported the introduction of UC for this reason. I reckon UC is so difficult and unattractive to claim that people will go out of their way – to the point of incurring hardship – to avoid claiming it. The likeliest outcome then is that UC, even reduced in scale as it is, will result in an increase in the underpayment of benefit – and a decrease in welfare expenditure.

    1. Do the maths again.

      Take the lowest unclaimed amount of £11.994 bn then subtract from that the highest amount of underpayment of £3.47bn for Pension Credit which leaves £8.52bn more

      Then take off 25% of the Housing Benefit maximum unclaimed (the pensioner bit) of £1.065 bn and you still have a £7.4bn increase.

      Then you need to use your £4bn tax credit cut against the £8.4bn unclaimed whih makes an increase of a minimum £11.4bn!

      So even arguing against myself and using the highest possibly deductions you claim it is still an increase of £11.4bn per year.

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