In an urgent, unanimous report published today, the Commons Work and Pensions Committee says Government should aim to cut the baked-in six week wait for the first payment of Universal Credit to a month:
- 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.
While increased availability of Advance Payment (AP) 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:
- Universal Credit seeks to mirror the world of work, but no one in work waits six weeks for a paycheque.
- The Committee calls on Government to reduce the standard waiting time for a first Universal Credit payment to one month. This would be entirely consistent with the monthly in arrears philosophy of Universal Credit.
The arguments for reducing the wait to one month 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.
- 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.
Rt Hon 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, Member of the Committee, said:
"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."