Universal Credit replaces Housing Benefit, Income Support, Working Tax Credit, Child Tax Credit and JobSeeker’s Allowance and Income-related Employment Support Allowance. 

It has been rolled out nationally for new claimants, but a further three million existing benefits recipients will be ‘mig-rated’ to Universal Credit, starting this summer.

The challenges of the system

Universal Credit expert and senior lecturer at the University of Sheffield Megan Blake told betterRetailing: “People on Universal Credit have to manage for the first five weeks with no payments, and this isn’t reimbursed afterwards. 

“What we’re seeing is that people try to manage for the first few weeks, using savings, cutting back and relying on family and friends, but this quickly escalates into debt when people are unable to afford the basics they need or bills come through. Communities are disintegrating and crime is going up.”

Andrew Mayers, of Mayers Minimart, Chester, told betterRetailing: “Since Universal Credit came in, we’ve had an increase in the amount of credit we’re extending to people, it’s currently at around £250 outstanding, mostly on basics. 

“People are losing their houses and crime is rising. Shoplifting is happening from people you’d never previously expect it from.”

Lynda Brown, from Brown’s Newsagents in Halifax, said: “People are being evicted, it’s changing the way people shop and more people are asking for basics on tick.

“It’s tough to do, but I’ve had to put my foot down as I’ve lost money from people being unable or unwilling to pay it back.”

Brown added that while there’s a Tesco Express nearby, the burden falls on independent shops as customers know they are more likely to consider extending credit.

Scottish Labour Councillor and Family Shopper Blantyre owner Mo Razzaq told betterRetailing: “It is causing a lot of hardship. What we’ve had to do is say take the food you need and pay it back when you can. 

“We get at least one person per week requesting credit because of Universal Credit. It’s the length of time it takes to receive the funds initially and, also, when someone’s circumstances change, it takes a long time to correct. People are struggling with bill payments and are getting evicted.”

Ramsay Hasaballa, of Premier Speke in Liverpool, said there had been no increase in credit, but added: “We’ve noticed people are getting paid differently, and it takes a while to get used to it.” 

Retailer impact

Two shop owners told betterRetailing they had not noticed an impact from the scheme.

Responding to the comments, Blake said: “The impact on independent shops is alarming; it’s not something we’ve seen before. Small shops are more vulnerable to market conditions but seem to be bearing the burden of supporting those affected by Universal Credit. 

“It’s important for them to know, and to let their customers know, that there is a support network. 

“Asking for credit is a sign of severe trouble – if shop owners can work with community groups, they can help their customers avoid reaching crisis point.”

Niall Cooper, director of Church Action on Poverty, said the concerns of shopkeepers should be a “wake-up call” to encourage politicians and government to “take the action required to fix the manifest problems with Universal Credit”. 

He called on shop owners to contact their MP if they experienced issues.

A survey by betterRetailing in 2018 estimated that more than 10,000 stores had donated to food banks in the prior 12 months. 

Asked how store owners can help, Blake suggested working with local and national groups such as community pantries, voucher providers, food banks and buying co-ops.

A DWP spokesperson said: “This anecdotal picture contrasts markedly with nearly two million people who are being helped by Universal Credit to get into work for longer and earn more than under the old system. 

“Advance payments are available on day one of a claim and there are other elements in place to help with emergency costs.”