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Universal credit issues in multiple local authorities has sparked new consumer debt fears as yet more late payments (this time in Colchester) sees many turn to citizens advice.
 

Last year we covered the Universal Credit rollout. Early consumer debt fears revolved around delayed payments. With households already struggling to balance books, further delays could be pivotal. Early trials had seen delays of over 6 weeks for payments. Those delays resulted in Scottish MPs blasting its impact early this year.

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Citzens’ Advice Colchester – New consumer debt fears

The Citizens Advice Bureau, Colchester branch has spoken out about their rollout locally. Adding to previously highlighted problems, the concerns spark continuing unrest. Despite the rollout starting months ago, issues still persist.

The branch has noted that potential knock on effects problems may have on the local economy. Notably, delays affecting Colchester council could surface, creating a circle of delayed and non payments. In just the Colchester area alone, Citizens Advice has helped clients handle around £215,000of debts. The entirety of the £215,000 is related to Universal Credit.

Local people and councils to suffer

The common case study with Universal Credit has deep lying problems. A person doesn’t receive their money. This causes a delay or non payment of council tax, rent or utility bills. The local council must then attempt to recover the money. With both the council and the citizen struggling, the council will not be reimbursed by central government. It creates a harsh loop.

While UC hasn’t been fully rolled out yet, it has already had numerous negative case studies. A number of local reports oppose the idea in its current form. The biggest fears of the scheme are it is currently unfit for purpose. With payments now centralised, they must be correct and on time. While the overall goal of UC may be admirable, its development has been marred with troubles.

“Damaging to communities”

Speaking to local press; Colchester Council leader Mark Cory spoke of the system. “In principle, the idea of simplifying the benefits system is a good one. However, the shambles and human cost of the Universal Credit roll-out has been enormously damaging. It has been damaging to many communities across the country.”

“Fortunately, we were one of the councils that benefitted from a later rollout. Our benefits team worked hard to prepare our residents for the changes. They also worked to provide support in the transition period.”

Liquidity

When dealing with commercial debts, a big sticking point is liquidity. A business needs to remain solvent to survive. This notion applies just as much to a person receiving any form of benefit. They can only pay what they earn. Should a person experience lengthy delays, they become insolvent. A person who cannot pay taxes may struggle to pay rent and utility bills. It becomes a fast downward spiral if the situation remains unresolved.

As a debt collection company, we do not want to see this. We intend to set up payment plans to help manage debt. If one of a debtors’ primary income sources dries up through non payment, even repayment plans become futile. Universal Credit can work, but in its current state, all can lose out. From residents, to local authorities to creditors of all sizes.