Universal credit wait reduced to five weeks

Tories welcome changes to hardship loans and housing benefit but Labour calls for welfare system rollout to be paused and fixed.

Powered by Guardian.co.ukThis article titled “Universal credit wait reduced to five weeks” was written by Rowena Mason Deputy political editor, for theguardian.com on Wednesday 22nd November 2017 17.27 UTC

Universal credit claimants will only have to wait five instead of six weeks for their first benefit payments after Philip Hammond bowed to pressure to ease hardship caused by the new welfare system.

Conservative MPs had threatened to revolt over the suffering caused by the long wait, which charities and councils have said is leading to evictions and increased use of food banks.

The chancellor will also allow housing benefit to continue for an extra two weeks after an application for universal credit has been submitted, to reduce the threat of eviction.

His U-turn was partially welcomed, but Labour and other opposition parties said it did not go far enough in addressing problems with the new system, which is designed to roll six existing benefits into a single monthly payment.

Jeremy Corbyn, the Labour leader, called on the government to “pause and fix” the rollout instead of making minor changes, as people were still facing delays with their claims and threats of eviction.

Under the measures unveiled in the budget, the chancellor cut the time people have to wait for their first payment by seven days and promised that hardship loans could be repaid over a year rather than six months.

The measures to ease the financial difficulties of new claimants amount to about £300m a year. In the small print of the budget book, it was revealed the rollout of universal credit was being slowed down, with a more gradual introduction to jobcentres by December 2018.

What is universal credit?

Universal credit is the supposed flagship reform of the benefits system, rolling together six benefits (including unemployment benefit, tax credits and housing benefit) into one, online-only system. The theoretical aim, for which there was general support across the political divide, was to simplify the benefits system and increase the incentives for people to work, rather than stay on benefits.

How long has it been around?

The project was legislated for in 2011 under the auspices of its most vocal champion, Iain Duncan Smith. The plan was to roll it out by 2017. However, a series of management failures, expensive IT blunders and design faults have seen it fall at least five years behind schedule.

What is the biggest problem?

There is a minimum 42-day wait for a first payment endured by new claimants when they move to universal credit (in practice this is often up to 60 days). For many low-income claimants, who lack savings, this in effect leaves them without cash for six weeks. The well-documented consequences for claimants of this are rent arrears (leading in some cases to eviction), hunger (food banks in universal credit areas report striking increases in referrals), use of expensive credit, and mental distress.

Are there other problems?

Plenty. Landlords are worried about the level of rent arrears racked up by tenants on universal credit. Unchecked, this will lead to a spike in evictions. Claimants complain that universal credit is bafflingly complex, unreliable, and difficult to manage, particularly if you are without internet access. Multibillion-pound cuts to work allowances imposed by the former chancellor George Osborne mean universal credit is far less generous than originally envisaged. According to the Resolution Foundation thinktank, about 2.5m low-income working households will be more than £1,000 a year worse off when they move on to universal credit.

 

The dozen Conservative MPs who fought for changes to the system were delighted with the one-week reduction after the government had initially refused to reduce the wait.

David Gauke, the work and pensions secretary, had defended the working of the system as recently as Tory party conference in October, announcing only minor changes to the hardship loans at the time.

Heidi Allen, the Conservative MP leading the calls for change, said the announcement was “a victory for common sense and compassion”.

She told the Guardian: “The government had struggled to technically get the system to reduce any further than five weeks, but what they have done instead, by offering housing benefit to be carried across for two weeks, is tremendous. All the risks of homelessness and rent arrears, it deals with it straight away.”

Iain Duncan Smith, the former work and pensions secretary who was behind the introduction of universal credit, said: “The chancellor is absolutely right to make advances more readily accessible for claimants waiting for their first instalment of benefits. No one should have to wait excessive periods to receive their first payment.”

However, opposition parties, charities and trade unions were underwhelmed by the changes.

Frances O’Grady, the general secretary of the Trades Union Congress, said it was a “small step forward, but big changes are needed or working people will be left thousands of pounds a year worse off”.

Corbyn said the verdict on the frontline was that food bank use increases 30% wherever universal credit is rolled out.

“This chancellor’s solution to a failing system causing more debt is to offer a loan. And the six-week wait, with 20% waiting even longer, becomes a five-week wait,” he said.

“This system has been run down by £3bn cuts to work allowances, the two-child limit and the perverse “rape clause”; and caused evictions because housing benefit isn’t paid direct to the landlord. So I say to the chancellor: put this broken system on hold, so it can be fixed, and keep a million more children out of poverty.”

Stephen Lloyd, the Liberal Democrat work and pensions spokesman, said the rollout “must be paused before even more of our most vulnerable citizens are made to suffer on the ideological anvil of this Conservative government”.

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