No justification for six week wait for universal credit, says committee

27 Oct 2017

A House of Commons Work and Pensions Committee report says no proper justification has been offered for the minimum six-week wait for universal credit, with a resultant link to problem debt, foodbank use and rent arrears. The Committee has found flaws in the argument used by the Government that this wait reflects how people are paid in work and not taken much solace in the DWP offering Advance Payments to mitigate some of the unwelcome consequences of the current design of universal credit.

In its report the cross-party committee says the Government should aim to cut the ‘baked-in’ six week wait for the first payment of universal credit to a month, as this is a major obstacle blocking the potential success of the policy.

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, say the committee. The report goes on to say that most low-income families simply do not have the savings to see them through this extended period without resorting to desperate measures.

While increased availability of Advance Payment loans of up to half the estimated monthly award are welcome, the Committee says they are no solution to a fundamental flaw in the current design. The committee is therefore calling on the Government to reduce the standard waiting time for a first universal credit payment to one month, consistent with the monthly in arrears philosophy of universal credit.

Among the reasons put forward for a change are that half of people earning £10,000 or less per year are not paid monthly, The seven waiting days at the very beginning are purely a ‘money-saving measure’ by the Government and does not mirror the world of work. The report points out that the Advance Payments are loans, repayable in addition to other deductions such as rent arrears which can be up to 40 per cent of the standard universal credit allowance. This will be difficult or impossible for some claimants to afford, it says.

The committee also called for minimising the processing period and pointed out that more than half of low and middle income families have no savings, and two thirds have less than a month's worth.

The report can be read here.

Gauke defends roll out of universal credit

In a related matter Secretary of State for Work and Pensions David Gauke has written to Committee chair Frank Field to respond to his concerns about universal credit.

Universal credit Full Service is available to all types of claimants in certain areas of Great Britain while universal credit Live Service is available to all single people across Great Britain, who are not in a full service area. Gauke says internal data shows that for those cases where full payment has not been made, around a sixth have not signed their Claimant Commitment or passed identity checks and the others have outstanding verification issues, for example housing, self-employed earnings and child-care costs. He added that the housing costs determination is often complex and can be paid, in some cases, after the rest of the universal credit allowance.

The letter goes on to say that data showed that in July just over half of new claims to universal credit full service received an advance. We do not hold data on the proportion of claimants who applied for advances, he said.

DWP’s data shows that in June 2017, 34 per cent of Universal Credit (Live and Full Service) households in the Social Rented Sector had housing costs paid directly to the landlord, compared to six per cent in the Private Rented Sector. There is not a roll-out schedule as landlords will not be mandated to enrol on to the Landlord Portal. However, DWP expect that most will accept the invitation to enrol which will also provide them with Trusted Partner Status.

DWP data shows a huge improvement in performance of its universal credit Full Service call centres. Fewer claimants are calling and calls are being answered faster, on average in just over five minutes in September.

The letter from Gauke outlines the six key measures of universal credit - payment timeliness, system response times, staff recruitment and capability, system availability, fraud and error, and unit costs – that were used to assess whether the next stage of the should go ahead.

The letter can be read here.