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Government responds to payday mayday

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As the wealth of the Government’s welfare reforms are now starting to take effect, more and more benefit claimants are now facing financial hardship. With the introduction of Universal Credit, claimants are facing one monthly payment which includes housing benefit and they are then expected to budget. There are now tougher sanctions on benefit claims whereby claimants can be sanctioned up to 2 years with no further claims for benefit allowed.

The Government has also recently introduced a new mandatory reconsideration process which replaces the old appeals system. For any new appeals made after 28th October 2013, benefit claimants must now ask for a mandatory reconsideration from the DWP before they can appeal directly to HM Courts & Tribunal Services. There is no time limit within which the department must reconsider their decision, and it is likely that this will take months rather than weeks.

Crucially, and most worryingly, an Employment & Support Allowance claimant will not receive any assessment rate benefit until their appeal is received by the Tribunal. Therefore this reform will see Employment and Support Allowance claimants, usually the disabled, without any form of income whilst the department reconsiders its decision.

The Trussell Trust has released figures which show that over 350,000 people received a minimum of three days emergency food from the Trust food banks between April to September 2013 compared to a year ago where figures stood at just over 113,000 users. Furthermore, in 2008, these figures stood at just over 26,000 people nationwide.

Chris Mould, the executive chairman of the Trust has called upon David Cameron to conduct an official inquiry into food poverty in the UK and the increase of the usage of food banks. He goes on to say “Problems with welfare are not new, they have existed for years, but the reality is that when the welfare provision breaks down, people go hungry. We’re talking about mums not eating for days because they have been sanctioned for seemingly illogical reasons, or people leaving hospital after a major operation to find that their benefits have been stopped or delayed. It’s not right that so many more people are now being referred to food banks due to problems with welfare.”

Since April 2013, welfare reforms such as bedroom tax, localisation of council tax support, local welfare provisions and the most controversial introductions of Universal Credit and the benefit cap have affected many low income families who have struggled in maintaining their small family incomes. In reality though, with this harsh line the Government is taking with benefit claimants and their undertaking to helping these people back into employment, they are neglecting the thousands being dragged further and further into poverty.

More and more people are turning to payday loans as quick easy access to money.

George Osborne has finally imposed a limit on payday lending costs. This has been backed by the Archbishop of Canterbury. The Government will change the Banking Reform Bill currently going through Parliament to cap interest rates and fees. However, the restrictions will be set by the Financial Conduct Authority. At the moment, charges can often exceed 5000% and when people are facing extreme financial hardship, this can be their only way out.

Let’s hope that this is the start of changes in the right direction to help these vulnerable people.

By Ngaryan Li, solicitor in the Pro Bono Unit