Universal Credit 'lobster pot' leaving claimants out of pocket without warning, MPs warn

Posted On: 
23rd July 2019

Universal Credit claimaints are being left trapped in a "lobster pot" because of "complex" and "baffling" Department for Work and Pensions rules, MPs have warned.

The Department for Work and Pensions said it provided "targeted support" for claimants.
Credit: 
PA

In a new report, the cross-party Work and Pensions Committee found confusion among DWP advisers over when claimants should move over to the new benefit, with some recipients facing a steep drop in income if they make the switchover.

Universal Credit aims to roll six existing working-age benefits into one payment, a move the Government says will simplify the welfare system and cut costs.

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The DWP has pursued a policy of "managed migration" for those making the switch to the new system, with the policy aiming to ensure that claimants moving off of the older benefits get transitional payments so that they do not take an immediate financial hit.

But the MPs warned that there are no similar protections in place for those whose circumstances have changed and so are deemed to have undergone "natural migration" by the department.

And they said: "Understanding when existing benefit claimants will need to naturally migrate to UC is so complex, it baffles even experienced benefit advisers."

The committee warned that claimants could end up out of pocket because of changes that do "not seem significant", including moving house to a different local authority area or even suffering a bereavement.

"Losing a partner is classed as a change in circumstance — which means that claimants who have just lost their partner must immediately claim UC at a time of considerable grief and distress," they said.

"We urge the Department instead to allow people who have lost their partner to remain on legacy benefits for a grace period of one year." 

The situation could also have "drastic consequences" for disabled claimants, the committee warned, with disabled adults and children among the groups "most likely to see their income fall when they move to UC via natural migration".

They accused the DWP of failing to give "clear or comprehensive information" to its own staff on when exactly somebody might need to move to Universal Credit and how it would affect their income.

That meant claimants were left "at risk of moving to UC either inadvertently, not realising that they will lose out, or because they are given the wrong advice by DWP staff or other organisations", they committee said.

'BAFFLED AND ANXIOUS'

Committee chairman Frank Field flagged a previous internal description of the system by a DWP minister as a "lobster pot" as he he hit out the DWP.

He asked: "In the history of humankind, has there ever been an example of a government introducing a fundamental welfare reform and none of its employees being able to tell if it will leave people better or worse off?

"Hardly surprising that baffled and anxious claimants are finding themselves trapped in what the Department chillingly calls the 'lobster pot' of Universal Credit, and with much less to live on as a result.

"The UC application page needs to come with a health warning, and anyone who gets inadvertently caught in DWP’s lobster pot should be compensated."

A DWP spokesperson said: "Universal credit helps people into work faster than the old system and provides targeted support. 

"Around one million disabled households will gain an average of £100 more a month, and changes to work allowances mean 2.4 million households will be up to £630 per year better off."