Pressure is continuing to mount on the Tory government to reduce the length of time people have to wait to receive their first Universal Credit payment, as a powerful group of MPs unanimously call on the Tories to cut the waiting time down to a month.
Under the current system, Universal Credit claimants have to wait a minimum of six weeks to get a payment, which includes a 7-day waiting period before they can even make a claim.
Administrative problems and confusion between Government departments has resulted in some people having to wait even longer than the six-week minimum, with opponents warning the new benefits system is pushing people into debt and leaving vulnerable people at risk of homelessness.
Now an urgent report from the Work and Pensions Select Committee, a cross-party group of MPs, says the in-built waiting time could totally destroy the whole Universal Credit project. Some commentators have gone so far as to say the Universal Credit mess could yet turn into Theresa May’s own “poll-tax moment”.
The report found:
- In areas where the full service has rolled out, evidence compellingly links it to an increase in acute financial difficulty, with widespread reports of overwhelmed food banks, problem debt and steeply rising rent arrears and homelessness.
- Most low-income families simply do not have the savings to see them through this extended period without resorting to desperate measures.
Government ministers have defended the six-week wait by arguing that ‘Advance Payments’ of up to half the estimated Universal Credit award are available for anyone struggling to cope, but the Committee says “they are no solution to a fundamental flaw in the current design”.
These loans, to give them a proper name, are repayable through deductions taken from a claimant’s award of up to 40% of their monthly Universal Credit payment – potentially trapping them in an unrecoverable cycle of poverty and rising debt.
Whilst the Work and Pensions Committee say they welcome the use of Advance Payments for people struggling to make ends-meet, “no one in work waits six weeks for a paycheque”.
They argue that reducing the waiting time for a first Universal Credit payment to one month would still be “entirely consistent with the monthly in arrears philosophy of Universal Credit”.
The Committee also says the arguments for a reduction to the standard waiting time “are compelling”:
- More than half of low and middle-income families have no savings, and two-thirds have less than a month’s worth
- Half of people earning £10,000 or less per year are not paid monthly. Many households simply do not have the resources to get by for six weeks, or in a minority of cases far longer, without resorting to desperate measures
- The 7 waiting days at the very beginning are purely a money-saving measure. They do not mirror the world of work – as the Centre for Social Justice has pointed out, no one works the first week of a job for free – and unlike the previous, standard benefit waiting days, they also leave claimants without housing costs or child benefit for the period
- Minimising the processing period
- The Advance Payments put forward by Government to mitigate some of the unwelcome consequences of the current design of Universal Credit, but do nothing to address their underlying foundations
- Advance Payments are loans, repayable in addition to other deductions such as rent arrears which can be up to 40% of the standard Universal Credit allowance. This will be difficult or impossible for some claimants to afford.
Frank Field MP, Chair of the Committee, said: “The baked in six-week wait is cruel. No one can give us any real justification for it. Such a long wait bears no relation to anyone’s working life and the terrible hardship it has been proven to cause actually makes it more difficult for people to find work.
“It is not too late for the Government to avert a Christmas disaster. They must act now.
“This urgent recommendation, of cutting that six-week wait, is the first step from the Committee in what I hope will be a series of reports on the Government’s ailing flagship welfare policy.”
Heidi Allen MP, a Member of the Committee, added: “Despite the clear support for Universal Credit, there is cross-party recognition that the 6 week wait does not honour the original intentions of the system.
“To truly represent the world of work, the payment cycle must mirror how the majority of people are paid i.e. monthly.
“Universal credit will only be the success it deserves to be if it works with claimants to find work, and not against them.”