UNIVERSAL credit has “failed millions of people” and “punishes the poorest” by meting out some of the most “punitive sanctions in Europe,” a damning review by peers has found. 

A House of Lords committee of crossbenchers called today for urgent reform of the benefit system, saying that it has driven people deeper into poverty. 

However, it fell short of demanding a complete overhaul of the system, claiming that this could cause severe disruption. 

Universal credit, which rolled six previously separate benefits into one monthly payment, has long been strongly opposed by anti-poverty groups, who say it has fuelled a sharp rise in foodbank use. 

The most controversial element of the scheme is the five-week wait for the first payment, which has pushed many claimants into rent arrears. 

“Change cannot come soon enough,” the Lords report said, highlighting the surge in claimants during the Covid-19 crisis and a predicted further rise in the months ahead. 

Some 3.2 million people made new universal credit claims between the start of the lockdown in March and mid-June.

Britain has “some of the most punitive sanctions in the world,” it notes, adding: “There is limited evidence that they have a positive effect.”

Economic affairs committee chairman Lord Forsyth of Drumlean said that the scheme in its current form “fails to provide a dependable safety net.” 

The Tory peer continued: “It has led to an unprecedented number of people relying on foodbanks and not being able to pay their rent. The mechanics of universal credit do not reflect the reality of people’s lives.”

He added that sanctions punish the poorest by “taking away their sole source of income for minor infractions.”

The committee’s review recommended the introduction of grants to offset the five-week wait, a reduction in sanctions and the cancellation of the £6 billion debt from the previous benefit system, which claimants must continue paying off “often at no fault of their own.” 

Shadow work and pensions secretary Jonathan Reynolds said: “Sadly, this report confirms what many have known for a long time — universal credit is simply not working. 

“Everyone can see that universal credit is a broken, overly punitive system entrenching working parents and their children in poverty. It’s time the government started listening and stopped doggedly pursuing a failed agenda.”

A Department for Work and Pensions spokesperson said: “We welcome the acknowledgement by the committee that universal credit is here to stay and we will consider its recommendations in detail.”