In debt thanks to Universal Credit. The story of Alex and Sandra.

20181011_225255Today’s story is about Sandra and Alex, a working couple in debt because of their  brief reliance on Universal Credit… It’s time for a look at the UK Government’s new benefit system and its effect on full-time workers.

For those that don’t know, Universal Credit is the UK Government’s grand plan to roll a whole host of benefit payments into one. So, instead of receiving Housing Benefit, Income Support and Tax Credits, for example, you’d get all three rolled into one monthly payment. After a troubled trial period, the new payments system was rolled out across strategic areas of the UK. Despite heavy cricism, the gradual rollout continues. By this time next year, many more recipients will be migrated to Universal Credit. As usual, the government are in complete denial over the detrimental effects it’s having.

The biggest criticism is the 5-week wait between payments as claimants migrate to the new system. In regions where Universal Credit has been rolled out, visits to food banks have doubled, and in some areas trebled. Recipients find the new system less generous and some have lost almost £2000 a year. The government argue the new system encourages people to work and their (somewhat conflated) figures suggest 1000 people every day go into work as a result. It has therefore been judged success but, critics ranging from former Prime Ministers to the Institute of Fiscal Studies say the Conservative party are soon to face a backlash when the roll out of UC begins in earnest next year.

The impact on families and individuals in part time employment has been very well documented elsewhere, but what isn’t talked about is the impact Universal Credit has on people who have never been on long-term benefits, people who find themselves temporarily between jobs.

As usual here on No Script for Life, it’s customary to examine the issue via the malleable prism of fiction. The following is a fictional case study firmly bedded in the real-life experiences of five people, whose experiences of UC has been rolled into three characters, Sandra, Alex and Raj.

Sandra left school at eighteen. After a long, lazy summer, she reluctantly got a full-time job  At first, the transition from school life and having expenses covered by her parents created a period of adjustment as Sandra came to terms with a simple truism of life; the more you work, the more money you have. By the time she met Alex, she had a good handle on the work thing.

Alex had worked in a solicitor’s office since he was sixteen, and soon invited his new girlfriend to move into his rented apartment. When the apartment was sold, Alex and Sandra found themselves moving from one home to the other within a short space of time. It was a turbulent time as tenancies were ended with a Section 21 notice over and over. Luckily, Sandra left McDonalds and her low-paid retail jobs behind for admin and managment, so they were able to pay the various exorbitant fees known only too well to fellow tenants.

After a host of short-lived jobs, Sandra finally found a secure position with a great company earning a guranteed £20,0000 per year. It was the most she’d ever earnt. After a year she left the secure position in an outsourcing company, snapped up by a rival company offering greater benefits. The happy time was shortlived when she fell victim to internal politics involving the training of new starters. Her mentor in her new job was somebody who’d been criticised by his bosses for his poor work and wasn’t liked by his superiors. He took shortcuts and a habit of palming things off to other people. Sandra’s training seemed destined to be flawed from day one. Although qualified and competent to do the job, the bad habits she’d been taught were ingrained within her daily activities. Citing her inability to get the job right, and disregarding the quality of the training she’d received, her six month probation period wasn’t extended and she found herself unceremoniously dumped, without warning. She gave up the best job she ever had, for nothing. Her new employer didn’t value her and the fact she’d walked away from a good job specifcally to be there mattered not one bit.

Sandra spent almost eight weeks trying to find another job. During that time she applied for Job seeker’s allowance, a payment of £60 per week, payable on the two week anniversary of the commencement of the claim. Just one problem; in Sandra’s area of the country Universal Credit was being trialled. If her claim was successful, she’d receive her first payment of £440 – in six weeks’ time.

Thanks to their incessent enforced house moves, Alex and Sandra had almost no savings in the bank. The shortfall in the household income needed to be filled, and quickly because at the time, Alex was not completing normal full-time hours in his job due to illness. The pair went through two paydays with, effectively, one wage coming into the house (made up of Alex’s shortened hours, and Sandra’s accrued holiday pay from the job she’d just lost). With nothing forthcoming from the department of Work & Pensions, the two of them had just one course of action open to them, if they wanted to pay their bills and eat. Sandra used her credit card to cover the shortfall in the household budget.

Six months later, Alex found himself out of work. It took him somewhere between six and seven weeks to find another job. Luckily, by this time Sandra had settled into her new job but the two of them were still recovering from her brief period of unemployment and, as before, they knew there would be no benefit money coming in from the state. The credit card was again used to cover the shortfall in the household income.

Before her work crisis, Sandra was trying to build a healthy credit rating, in the hope of being able to apply for a mortgage at some point in the future. Unfortunately, as a credit newbie, the interest on her credit card purchases were extremely high.

Two years later , Sandra and Alex are still paying heavily, figuratively and literally. Between them they are only ever able to pay back the minimum amount off the credit card each month. Forever victims of circumstance, they weren’t in a position to plan ahead. It was a rarity to change jobs and not have a ‘transition month’ – a calendar month where there’s slightly less coming in, and at a slightly different date in the month, before things settle down. These transition months were financially tight for the couple, and with energy and fuel prices rising, they were never able to get ahead, finding bills that should’ve been paid in advance, were now being paid in arrears. Whilst they never missed any payments of anything during these unemployment and transition periods, the price for they paid to keep the boat afloat was high. Two years on and they are still paying £250 – £300 per month off of two credit cards.

Universal Credit isn’t designed to help people like Alex and Sandra who are not long-term benefit recipients. For a lot of people, Job Seeker’s Allowance and Housing Benefit bridged the financial gap between jobs. Having money coming in when the chips are down, and when the future is uncertain is essential. So, what happens when working people like Sandra and Alex find the safety net has gone?

When changing jobs there is always an element of risk, at least Alex with his long stints in solicitor’s offices thought so. Will I get on well enough with my new colleagues to work with them for five days per week? Will the company be all that I thought it’d be when I joined? Will the work be satisfying or mind numbing? Will travelling there be alright?

There are times when a new job simply isn’t everything it was cracked up to be and many of us, are unable to go back to the companies we’ve just left because our post has already been filled by someone new.

What about Sandra and Alex’s neighbour, Raj and his family? Raj has four children of school age and a wife who works as a post lady. Raj hates his job, the work load is increasing and he hasn’t had a pay rise for two years. In real terms, thanks to inflation, his wages are worth less than when he joined the company. His children are getting older and more demanding and his workload is increasing but Raj knows what happened to Sandra. He can’t afford to take the risk of changing jobs, in case it doesn’t work out. If his new job is worse than the one he left, or he faces some kind of problem which means he has to leave, he’ll do so without the safety net of a welfare system that doesn’t have full time workers in mind.

Without a benefit system that can prop you and your family up for a short, turbulent period, people feel like Raj, afraid to leave their jobs. When you’re budget is on a knife edge, being pushed closer to the edge by rising prices, if something happened like Sandra experienced, the prospect of homelessness becomes very real, very quickly.

Sandra and Alex can’t apply for a mortgage – their debts are too high, thanks to using the credit card when the state should’ve supported them. Both of them have worked full time since the age of eighteen and for the benefit system – the safety net that they contributed to with their taxes– not to be there, put them into debt.  In a wealthy country like the UK, where a MP’s lunch can cost more than the amount Sandra would’ve received in a month…It should never have been this way.

It seems Universal Credit doesn’t work for people who leave a good moderately well-paid job with every intention of going straight into another, as quickly as possible. There used to be a two-tiered system where new claimants were given a six week period to find a job before they go onto a more stringent period of coaching. The money to travel to interviews and a bit to help people keep themselves afloat during short periods of crisis is becoming increasingly absent. Career professionals should not have to fear leaving their jobs because there is no safety net to catch those whose new jobs don’t work out.

Universal Credit let Alex and Sandra down badly and it’s forcing Raj to stay in a job he hates, lest he spins the wheel and gambles his financial security in a new job.

The new benefit system has wrecked lives of longterm recipients and those who need a helping hand whilst they sort out a new job.

Alex and Sandra are in no doubt, the people involved in the planning of UC are liars. From their point of view things don’t add up. The Department of Work & Pensions said they wanted to encourage people back to work – by giving them a monthly benefit wage? They say the idea was to support people who struggle to manage their finances – by making direct payments to landlords an opt-in process?

Raj can’t understand it either. He knows the people who planned this new system aren’t stupid. They’re not fools. So how can they get it so wrong? Well, they didn’t. They didn’t get it wrong – as far as Raj is concerned, UC has so far done exactly what the government wanted. Forced people into unsuitable jobs where they’re forever on the merry-go-round of ever-changing employers as they struggle to find their niche, he sees them come and go where he works. Some of them had learning difficulties or home-life turmoil, there was no way they could keep the demanding job. He just ends up picking up the slack because of a vacancy that’s never filled for long. To Raj, it seems the sole purpose of UC was to cut the financial chord of the so-called scroungers.

The government got what they set out to achieve, the only surprising aspect from their point of view is how badly the system has been rolled out and the backlash it’s created. As many more working professionals are about to discover sooner or later, there’s a benefit system that’s going to make them fearful of change and maintain the safe but interminable status quo for an indeterminate amount of time.

What will happen next time Alex and Sandra have a work crisis? What happens when Raj’s punishing job pushes him into a pit of despair? Whatever happens, don’t bother going to the job centre because there’s a massive hole in the safety net and all of us, everybody, is at risk of falling through. The moral of the story? Don’t fall. The reality of the story? Falling is a part of life, it’s the welfare system of a wealthy country that should catch us.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s