Universal Credit 5-week wait ‘makes debts worse’ as 4 in 5 have first payment docked


THE five-week wait for Universal Credit “makes debt worse” and 4 in 5 claimants get first payment docked, a damning report has found.

The report by the National Audit Office found the wait time was “exacerbating” financial woes by forcing people to take on more debt and then have their first payment cut to make up for it.

The five week wait makes debt worse, according to a new report

The National Audit Office said the wait tile “can exacerbate claimant’s debt and financial difficulties” and hit those households already struggling to make ends meet.

According to the report 80 per cent of low-income households have “deductions” from their benefits of up to 30 per cent when their first payment does come because of taking out debts to cover the wait time.

This is compared to 61 per cent of all households.

HOAR launched the Make Universal Credit Work campaign to slash wait times for first payments so people aren’t forced to sell their belongings or take out loans to survive – and to make it easier for people to get back to work.

According to research by the Department for Work and Pensions rent arrears “increase more rapidly” after a claim for the benefit – sending households further into debt.

Think-tank Resolution Foundation found many people struggling to get by during lockdown did not take advance payments while waiting for the first Universal Credit cheque over fears of being saddled with more debt.

The wait time for the first payment often stretched far beyond the estimated five-week-wait time – at least 6 per cent of households in 2019 – or 105,000 new claims – were forced to wait 11 weeks or more the full payment.

Experts have warned the wait time can push people into “severe hardship” and even cause them to feel suicidal.

But the NAO did find the DWP had “significantly” improved the proportion of claims paid on time, from 55 per cent in January 2017 to 90 per cent in February 2020.

In 2019, 312,000 people still had their first payments made late – up from 113,000 in 2017 – because of the overall number of claimants rising.

The report did not cover the period during the coronavirus pandemic where the number of people claiming Universal Credit hit 3.2 million, according to the Office for National Statistics.

But the number of people paid late rose from 113,000 in 2017 to 312,000 in 2019, due to the overall number of claimants rising.

DWP chiefs were armed with an extra £895million to use to double the number of work coaches to 27,000 over fears of mass unemployment because of the lockdown.

Iain of the Joseph Rowntree Foundation said the five-week wait should have been ditched long before the coronavirus pandemic.

He said: “There was nothing compassionate or just about this policy prior to the pandemic.

“As the levels of unemployment grow, we urgently need to get support to people when they need it.”

In the last week, thousands of jobs have been lost as high street shops have announced cuts to stores.

A DWP spokesman said: “Universal Credit is delivering in these unprecedented times, with more than 2.5 million new claims processed since mid-March and over one million advances paid to those in urgent need within days.

“Nobody has to wait five weeks for payment.

“As the report shows, significant improvement has been made in the proportion of Universal Credit claimants receiving their first payment on time and in full, currently around 90%.

“We’ve also increased the standard allowance by up to £1,040 a year, as part of a package of welfare measures worth over £6.5 billion to support the most vulnerable.”

The number of people on Universal Credit hit 3.2 million during lockdown