Six-week wait for universal credit set to be reduced

A Trussell Trust foodbank. Photo credit: Newfrontiers via photopin cc

Powered by article titled “Six-week wait for universal credit set to be reduced” was written by Heather Stewart and Patrick Butler, for on Wednesday 15th November 2017 11.28 UTC

The government is preparing to confirm that it will cut the six-week waiting time for universal credit, caving in to Conservative backbench rebels.

After being promised concessions by ministers, a group of Tory MPs concerned about the impact of the delay on their constituents were persuaded not to vote against the government in a Labour-led debate on universal credit last month.

The six-week wait was the central concern of the group, which includes Heidi Allen and Johnny Mercer, and the government is expected to reduce it, most likely by eliminating the seven-day mandatory waiting time at the start of any new claim.

The move comes as MPs prepare to vote on a cross-party motion to cut the wait for a first payment from 42 days to a month. The backbench business debate in the House of Commons on Thursday will focus on the recommendations of the recent work and pensions committee inquiry report on universal credit.

The committee chair, Frank Field, warned that a government defeat would send a clear message to ministers that the long wait had to go: “Universal credit’s design and implementation have been beset with difficulties that knock claimants into hunger, debt and homelessness, but the most glaring of these in the first instance is the six-week wait for payment.

“I doubt many households in this country could get by for six weeks, and for many, much longer, with no income, never mind those striving close to the breadline. The baked-in wait for payment is cruel and unrealistic and government has not been able to offer any proper justification for it.”

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.


Last month, a committee report described the 42-day wait as a “major obstacle” to the policy’s success. It found the delay caused claimants to run up debts and/or turn to foodbanks. “Most low-income families simply do not have the savings to see them through such an extended period,” it said.

The Resolution Foundation has estimated that cutting the waiting time to four weeks would cost the government £150m-£200m a year. It is unclear where the Treasury would find the money.

The thinktank said in a recent report: “The foundation recommends shortening waits considerably by scrapping the current seven-day waiting period and compressing payment processing days to ensure payments happen a week and a half earlier.”

The government is unlikely to go lower than four weeks because the Department for Work and Pensions (DWP) uses one month’s of earnings data to calculate recipients’ entitlements. The universal credit system uses monthly payments as part of its aim to mimic earnings.

A government source told Sky News that a concession on the waiting time would come early next week, as Philip Hammond, the chancellor, prepares to deliver the budget on Wednesday.

Universal credit, which combines six benefits, is being progressively rolled out across the country. It is meant to improve work incentives, but has been made significantly less generous since it was first designed, as the Treasury seeks to cut the welfare bill.

Hammond has stressed to cabinet colleagues that there is little cash to spare to cushion the blow of the new system, but his focus on balancing the books is frustrating fellow Tory MPs, who are concerned about the electoral impact of continued austerity.

A Treasury spokesman refused to comment on reports that the budget would soften the universal credit regime.

The employment minister Damian Hinds said: “I won’t be commenting on budget speculation, but we have made clear that no one has to wait for six weeks before they get their first full payment because they can get an advance, which is interest-free and recovered over six months.

“We have always said that we are continually looking to improve the system and the bottom line is that universal credit is working and getting more people into work.”

Jeremy Corbyn, the Labour leader, has repeatedly made universal credit his focus at prime minister’s questions, and Labour held an opposition day debate on the issue last month in an attempt to expose Conservative divisions and draw attention to concerns about the system.

The DWP recently announced that charges for calling the universal credit helpline would be scrapped, after Corbyn complained that it was costing up to 55p a minute.

The proposed shortening of the waiting time was welcomed by anti-poverty charities and thinktanks, although there were concerns that four weeks was still too long for low-income claimants to wait, and more needed to be done to restore the benefit’s flagging credibility.

David Finch, a senior economic analyst at the Resolution Foundation, said: “Questions remain over how long the wait will be reduced by, and whether more flexibility can be built into the system, given that three in five new claimants moving out of work are paid either weekly or fortnightly.

“Today’s move should signal the start of far wider reform to universal credit to make it fit for purpose, and help it deliver on its huge potential.”

Recent research by Peabody housing association estimated that the 42-day wait would result in more than 20,000 low-income families having no income this Christmas. It called for the period to be cut to two weeks.

There are concerns that design and administration changes alone will not mitigate the impact of universal credit on families. The Resolution Foundation has said cuts to the generosity of universal credit will leave 1 million working households an average of £2,800 a year worse off by 2022. © Guardian News & Media Limited 2010

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