Universal Credit flaws

sir – Universal Credit (UC) is being widely criticised for failing to deliver on its promises to make work pay, simplify the system and reduce costs. A growing body of research shows that this is due not to teething problems, but to failings in design.

To take one example, UC is not paid until after six weeks. Consequently, people are being tipped into debt and rent arrears. Reducing this time to four weeks is unlikely to avoid the risk of missed monthly rent payments, with major impacts on landlords as well as claimants. Discretionary advance payment loans do not solve the problem, because they add unnecessary complexity and fail to prevent ongoing financial difficulties.

Other flaws in the design are likely to cause widespread disruption as roll-out continues. One such is that, for two thirds of working claimants (for whom it replaces working tax credits), UC has a marginal effective tax rate of over 75 per cent, far exceeding the 45 per cent top rate of income tax.

Another is the requirement that working claimants attend appointments at Jobcentre Plus, despite already passing the ultimate test of willingness to work by having a job. This means that workers can be sanctioned and lose their in-work benefit because they were at work.

A number of leading charities are calling on the Chancellor to announce, in the forthcoming Budget, that he will restore UC work allowances, pay UC after two weeks and end the freeze on child benefit and other social security payments such as local housing allowance. These proposals would certainly help ameliorate some of the immediate failings being identified in research, although for UC to deliver on its stated promises further changes will be required. Professor Peter Dwyer

University of York Dr Michael Orton University of Warwick Dr Sharon Wright

University of Glasgow and 111 others; see telegraph.co.uk