Benefits reform ‘to force 1 in 4 into poverty’

ONE in four Scots will be living in poverty by the end of the decade if the coalition government forges ahead with “criminal welfare reforms” that draw together a range of benefits into one universal credit, according to charity chiefs.

The claim has been made by the Scottish Council of Voluntary Organisations (SCVO), which has commissioned a 
report into the effects of the radical changes to the benefits system being proposed by the Westminster government.

The report, by public policy expert Dr Jim McCormick, says the new universal credits system, to be introduced over the next two years, contains “serious design flaws” and will plunge far more Scots into poverty than expected.

Initial estimates were that 200,000 children and 300,000 adults would be plunged into deprivation UK-wide, but according to McCormick the numbers will be much greater. The SCVO warns that more families will be forced to rely on charity to survive.

The changes to a single universal benefit – bringing together income support, 
jobseeker’s allowance, employment support allowance, housing benefit, and child and working tax credits – follow the cuts in child benefit voted through at Westminster last week, aimed at reducing the UK’s huge welfare benefits bill.

The universal credit is aimed at simplifying the complex benefits system into one new single payment.

But a series of flaws in the new system are outlined by McCormick, the Scotland adviser to the Joseph Rowntree Foundation, who said vulnerable women are at particular risk from the move to a single payment into households.

Universal credit is seen as an “all-or-nothing” reform, says McCormick, which means that getting payments wrong would leave people facing delays, errors or cuts to their only source of income.

McCormick also said housing benefit should not be scrapped and should remain as a standalone benefit, as this would cut the risk of rent ­arrears.

“Serious design flaws must be addressed,” he added.

He suggested Scotland should set up its own Financial Security Change Fund to ensure those affected receive the maximum benefit to which they are entitled.

This should be done with “matched funding” from the financial sector in Scotland to allow adults on low incomes 
to get access to “simple” bank accounts – which are needed to receive universal credit – as 4 per cent of Scots are currently without a bank account.

Power firms should also be encouraged to move energy customers who currently have the highest bills because they pay in cash or have pre-payment meters to the cheapest tariffs.

SCVO chief executive Martin Sime said: “The UK government’s £2.5 billion cuts in benefits must be seen for what they are: an assault on families, communities and the economy of Scotland.

“These callous cuts masquerading as reform represent an active choice taken by the UK government, which is hurting the most disadvantaged people in Scotland.”

One in four families in the UK could be living in poverty by the end of the decade as a result, he said.

“These criminal welfare cuts, high unemployment and a flat economy mean that more people than ever will be turning to the third sector for help, advice and practical support this year.”

The organisation is now launching a survey to ascertain the third sector’s ideas on how to mitigate the effects of the cuts.

Margaret Curran, shadow secretary of state for Scotland, said: “The government’s chaotic introduction of universal credit is just another example of how incompetent this Tory-Liberal government really is.

“On Tuesday, we saw that the government is prepared to cut the incomes of hard-working Scottish families at a time when people are already struggling to make ends meet.

“We need welfare reform that works and that makes sure people who can’t work are supported and those who are able are helped into a job.”

John Dickie, head of Child Poverty Action Group in Scotland, said: “Time is running out for UK ministers to respond to the mounting evidence that any positive impact of the new universal credit is being fatally undermined by design flaws, underinvestment and a lack of advice and information support for the hundreds of thousands of families who will rely on the new ­benefit.”

Peter Kelly, director of the Glasgow-based Poverty Alliance, said the organisation shares the concerns about the impact of welfare cuts.

He added: “If some of the proposals contained in Jim McCormick’s report are implemented it would help allay 
the fears that many recipients of welfare – lone parents and others – have expressed to us.

“If the UK government won’t act, then it is up to Scottish Government and local authorities to work with the third sector.”

Twitter: @ScottMacnab