Benefit reforms: One year on, universal credit is not working

The people of Warrington have been feeling like Iain Duncan Smith's guinea pigs. For most of the past year, the town in Cheshire has been a testing ground for the Secretary of State for Work and Pension's pet project, universal credit, and those people involved are losing patience.

Peter Fitzhenry, director of Warrington's biggest social landlord, Golden Gate Housing, is unequivocal in his assessment of IDS's latest welfare reform. "This is what I think of it," he said, turning around his computer to show a picture of York's ancient market street, The Shambles.

Payments have been so haphazard that 92 per cent of those on Golden Gate's books using the new benefit are in rent arrears, and two have been evicted since moving on to it. A further 13 are on suspended possession orders or notices seeking possession. Typically, around half of housing association tenants on housing benefit are in rent arrears, according to the Department for Work and Pensions (DWP). "The problem seems to be that the scheme is running but they're making it up as they go along", said Mr Fitzhenry.

Universal credit was intended to create a simple single benefit that claimants receive monthly and use to pay rent and other bills themselves. Some of the build-up in rent arrears is down to welfare claimants struggling with the change to monthly budgeting. But experts say much of the debt is because of administrative errors and computer glitches causing the DWP not to pay.

For more than half of its universal credit tenants, the housing trust has asked for the rent payments to now go directly to the trust. But this has not curbed the spiralling arrears. "Of the direct payments we do get from DWP, about half of the amounts are wrong," Mr Fitzhenry explained. "It's always too little."

Payments also go missing altogether. "Our first payments [from DWP] that were supposed to go to us were sent to the DVLA. We still don't know why, that's just what they told us. The computer system collapses if your payment day is a Saturday or a bank holiday, and then everything has to be rebuilt on a Monday and the money ends up going direct to the client. It's a computer error."

The DWP denies that it paid the DVLA by mistake and says that it has got the payment amounts wrong only once this month. It did not address how often mistakes were made in previous months.

Because of the small scale of the pilot, only 40 of Golden Gate's 8,700 tenants are on universal credit, but the housing trust has had to dedicate two full-time staff to chasing DWP payments for those on it.

"My biggest worry is that they're rolling this system out across the whole North-west," Mr Fitzhenry said. "They're struggling to cope with the four local authorities now. Why would you roll it out until you've tested it and it works?"

Pat Connelly, 58, was moved on to universal credit in January. He is a roofer but the work is seasonal and he often finds himself unemployed. He was worried about losing his flat under the new system, so made sure his housing benefit was going to be paid direct to a housing trust. In March, he got a letter seeking repossession of his flat. It said he was £1,200 behind in his rent, even though it was supposed to have been paid. "As far as I knew, it was being paid by DWP. It came as a shock to me", he recalled.

He had been asked to send DWP a copy of his tenancy agreement, which he says he did. DWP argues it was a delay in receiving this that caused his rent not to be paid, but Mr Connelly says he sent the agreement as soon as the department asked for it. The sudden prospect of eviction sent him into a downward spiral. "It made me ill and I wasn't sleeping. I went to the doctor and they gave me some tablets to help me sleep and calm my nerves."

He said DWP's support system was often contradictory. "I kept talking to different people. One would say, "OK, Mr Connelly, it'll all be sorted out, your housing will be paid; and, the next thing, someone would be on the phone saying the opposite.

"I asked the man in the job centre about all this and he said it was a shambles. I said to him 'how will families cope?'" The day his first benefit payment was due, he checked his account and found nothing was there. In a panic, he called DWP: "They said, 'Oh, we've had a problem on the computer, which is why it's not in yet, but it will be later'."

Universal credit pilots for those with the simplest claims – generally, single young men who have not needed welfare before – have been running in Warrington, Wigan and Oldham since last July and in Tameside since April 2013.

All four local authorities were supposed to begin the trials in April but IT failures delayed the expansion. By 30 September last year, there were still only 2,150 people in the country trying out the policy, despite original plans to begin it nationally that month. Even now, there are still only around 6,000 people trialling it.

Steve Cullen, chief executive of Warrington Citizens Advice Bureau (CAB), had been optimistic that universal credit would encourage people into work and is despondent about its failures. "It's a relatively small number of claimants and a lot of problems," he said. "We do need a flexible working benefits system. What they promised and what we hoped for was a universal credit system that would genuinely adapt to people's changes … but it's been a year now and yet still the problems are increasing not decreasing."

He believes the benefit shake-up was supposed to make sure that work always paid more than being solely on benefits, but that bureaucratic delays and computer errors are undoing this message.

One man who the CAB worked with was sharing a flat with his brother and recently decided to leave the town after his universal credit didn't come through. He was supposed to start on the benefit in October but DWP could not work out how to split the rent on a shared tenancy. Then he started working part-time in November in a bar and DWP said they could not verify his payslips. In January, he came to the bureau with rent arrears, having received no money at all. His benefits should have been adjusted because of his part-time work, but instead nothing came. "The message is supposed to be that everyone is better off in work. He should have been, but he wasn't," said Sam Louden, head of welfare in the town's CAB.

Owen, 34, who does not want his surname printed, began on universal credit as a jobseeker in December but had to change to sickness benefits following a mental health crisis. While trying to cope with his illness, he found he was having to chase almost every payment. "It was confusing from the start. They initially delayed the payments and said I had to prove I was going to be ill. Then all of my payments were never when they said they would be.

"Once, they inputted the wrong sort code. I gave them the right one and then the next month it happened again and they still had the old one on the records. Last month, I checked my bank account at 4am because it's supposed to come in at midnight. When it wasn't there I was awake the rest of the night and had to call them the next morning.

"It's not working, is it? Not really. People are friendly on the phone but I've had to chase four out of six payments because they never came."

Lee Chester, 19, has been on universal credit since February, after he was made to leave the family home. He lives in a one-bedroom flat where the rent is meant to be paid directly by DWP. But it does not always happen. "Apparently, I'm £200 in arrears and I've no idea why," he said.

A DWP spokesman said Mr Connelly's arrears had been sorted out. He said: "Universal credit is transforming the benefits system, ensuring work pays and making it simpler for claimants to move into work. It's already having a positive impact.