Problems with the Universal Credit system are causing hardship and misery for too many people, a charity has warned.
A poll by StepChange found a quarter of people receiving Universal Credit are in problem debt – three times the rate among the general population.
One in 10 people said that they had used a loan shark as a result of a problem linked to social security and 43% had used credit to pay for essentials over the past year.
Meanwhile, a survey of StepChange clients who are on Universal Credit found nine in 10 said the five-week wait for the first payment causes hardship and 52% meet the definition of destitution, having gone without two or more basic essentials in the past month.
As well as the five-week wait and unpredictable swings in payments, common causes of problems include delays and errors and unaffordable deductions from benefits to repay debt.
StepChange said the social security system should support financial resilience and recovery from problem debt, but the present system too often undermines rather than supports these aims.
* One in 10 UC claimants has used a loan shark as a
result of a problem linked to social security
* 43% has used credit to pay for
essentials over the past year
It argued that debt collection practices through the social security system would not meet basic regulatory standards required of consumer credit firms.
It is calling on the government to end the five-week wait for Universal Credit, minimise fluctuations in payments by introducing an annual disregard for changes in income, allow people to choose whether to receive their support monthly or more frequently, and overhaul the system of deductions to repay debt.
In the longer term, the charity says the government should develop a sustainable plan to reinstate the link between the value of working age support and the cost of living.
Peter Tutton, StepChange’s head of policy, said: “We already knew that too many people are experiencing hardship and misery through problems with the Universal Credit system. What is new is the evidence of exactly how Universal Credit actively worsens debt problems, more so than the legacy benefits system.”
He warned that the goal of improving the financial resilience and inclusion of households is at risk of unravelling because of serious and avoidable problems in the welfare system.
“There is an urgent need to rethink the way that Universal Credit and legacy benefits can help people recover from financial difficulties instead of making those problems worse,” he added.