How universal credit’s ‘minefield’ of rules discourages work

How universal credit’s ‘minefield’ of rules discourages work

Sarah Blackaby is precisely the kind of person that universal credit, the UK government’s new benefit system, is meant to help. Ms Blackaby, 38, has been struggling financially since May, when her fiancé left her and her daughter. While she has had to cut her working hours from five to three days a week to care for Florence, now 18 months, she desperately wants to retain her job as a physiotherapy technical instructor at Addenbrooke’s Hospital in Cambridge.

Yet, as she grapples with the emotional and financial shock, Ms Blackaby has also been tussling with an inflexible and unpredictable bureaucracy. She is one of thousands of people around the UK facing substantial financial difficulties because of the way the new scheme, which is gradually replacing six legacy benefits, reimburses childcare costs.

While, under the old system, the government paid its share of childcare costs directly to providers, universal credit claimants are paid only in arrears, after they produce receipts.

The change is one of several that critics contend have made it harder for single parents to enter or remain in work. In November, Philip Alston, the UN special rapporteur on extreme poverty and human rights, said single parents — 90 per cent of whom are women — were the group worst hit by the scheme’s shortcomings.

Gingerbread, the charity representing single parents, has said many are concerned that work will not pay for them under universal credit once childcare costs are factored in.

Ms Blackaby said payment in arrears and fluctuations in the amounts paid often left her bearing hundreds of pounds of costs for weeks. Some months, she would be reimbursed the government’s 85 per cent share of her nursery bill — usually £483 a month — for only the first two weeks of a month. At other times, they would reimburse her for the whole month.

“It’s not easy at all,” Ms Blackaby said, bouncing Florence on her knee.

Things grew even more complicated in the months when Ms Blackaby’s mother had to miss her normal day a week as Florence’s carer and the child had to attend the hospital nursery for an extra day. Such changes can mean that Ms Blackaby could be paid a total as low as £400 in some months and as much as £1,600 in others.

“Childcare costs are astronomical but they want people to be working,” Ms Blackaby said. “I don’t think it’s something I should be fighting for every month to get paid.”

The payments system has been raised in parliamentary hearings about universal credit, chaired by Frank Field, the independent MP who chairs the work and pensions select committee. Mr Field said claimants should either be provided with interest-free advances to help them make the payments, or the government should revert to paying childcare providers directly.

Amber Rudd, the newly appointed work and pensions secretary, has pledged to examine the system’s effect on single parents. However, the Department for Work and Pensions said it was already giving more parents “tailored support to meet caring responsibilities”.

It pointed out that universal credit reimbursed 85 per cent of claimants’ childcare costs, compared with the 70 per cent paid by legacy benefits. It had also set up a discretionary “support fund” for the hardest hit parents.

“We are spending a record £6bn a year by 2020 to support childcare and early years education, offering 30 hours free to working parents of children of three and four years,” it said.

Trevor Carpenter: ‘For a single parent, it’s a minefield’ © Charlie Bibby/FT

But the shortcomings of the system are clear to those trying to use it. Trevor Carpenter, 47, from Croydon, discovered last year that he had a son, Kai, from a previous relationship. A year ago, after his mother was deemed unfit to care for him, Kai, who is now four, came to live with Mr Carpenter and his then partner. Mr Carpenter’s partner left in June and he had to give up his £21,000-a-year job as a hotel concierge to look after the boy in his school summer holidays.

He was put on universal credit. “For a single parent, it’s a minefield,” Mr Carpenter said.

While there used to be no work requirement for parents until their youngest child was at school, claimants are now obliged to show they’re seeking work as soon as the youngest child turns three. But Mr Carpenter fears that any job that fits around his son’s school hours will cost so much in lost benefits that it will leave him worse off. He currently receives £1,560 a month in universal credit, of which £1,000 goes on rent. His old, full-time job gave him £1,470 a month take-home pay.

“If I go back to work — and I’m being forced to go back to work — I’m going to be earning less,” he said. “Any job I apply for now is likely to be minimum wage.”

Clare McNeil, associate director of IPPR, a public policy think-tank, said that because of the way benefit payments reduce as claimants earn more, single parents earned little more for working 16 hours a week than for eight, giving many little incentive to work longer hours.

“With any enormous welfare change like this, there will be losers and winners and it really does depend on the individuals’ circumstances,” she said.

Reforms to make the system more humane cannot come soon enough for Mr Carpenter and Ms Blackaby. Mr Carpenter said he was constantly nervous he would lose his benefits for a breach of the rules. “Your money can be taken away if you forget a meeting,” he said. “It’s a horrible situation.”

For Ms Blackaby, meanwhile, the new rules have heaped further stress on to an already tough situation: “There have been times I’ve thought it’s just too difficult,” she said.

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