The Work and Pension Committee says that the current wait of at least five weeks for the first payment of Universal Credit can cause great difficulties for some households and that while its Advance payments (loans) can provide a valuable financial lifeline, some people cannot the required repayments.
The Committee - that has a majority of Conservative MPs - warns that this leaves people with a difficult choice: five weeks with no income, or the risk of debt and hardship later.
In a new report, the MPs conclude that the introduction of a new payment - equivalent to three weeks of the standard allowance - would be a simple way of ensuring that new claimants had the money they needed for basic living essentials.
For people moving from existing benefits, DWP should make the move seamless wherever possible - and pay a starter payment in other cases.
Although Advances should still be available for people who need further support to get by, they should be renamed 'new claim loans' to make clear that they will need to be repaid.
The DWP should also recognise that a request for a loan is a clear indication that someone is struggling and offer support as early as possible.
Among the Committee’s other key findings and recommendations include:
- highliighting its earlier report in to the DWP's response to the coronavirus outbreak that inlcuded that the £20 week increase to Universal Credit and tax credit be given to those on legacy benefits such as ESA;
- that the Government should now extend the £20 week increase past April 2021 and make the rise permanent;
- because of the time taken to complete a Work Capability Assessment (WCA), some disabled people and people with health conditions must wait much longer than five weeks to receive their full UC entitlement;
- four months, on average, is too long to wait and the DWP must work to speed up the WCA process;
- the Universal Credit Help to Claim service must go beyond assisting with an initial claim and should include debt advice, support for people struggling with repaying Advances and support for people with complex needs;
- the DWP must carry out research to develop its understanding of the possible impact of UC, particularly the wait for the first payment, on the use of food banks; on claimants' levels of rent arrears; and on levels of psychological distress.
Ken Butler DRUK’s Welfare Rights and Policy Adviser said:
“Back in June 2019, a report by the Disability Benefit Consortium found that the 5 week wait for Universal Credit was having a devastating impact on disabled people.
The impact of on disabled people having less money included struggling to pay for food (70%), driving a significant number to food banks (35%) and a worsening of people’s health, in particular their mental health (85%) and again, most worryingly driving people to consider suicide.
This situation is most likely to have worsened following the Coronavirus pandemic.
A system of starter payment grants would undoubtedly be a welcome and necessary boon to disabled people moving to Universal Credit, as would its £20 week increase being made permanent.
However, those disabled people still receiving legacy benefits such as ESA must not be forgotten and the £20 week increase must be also be awarded to them.”
The Work and Pensions Committee’s report Universal Credit: the wait for a first payment is available from parliament.uk.