Universal credit claimants will only have to wait five instead of six weeks for their first benefit payments after Philip Hammond bowed to pressure to ease hardship caused by the new welfare system.
Conservative MPs had threatened to revolt over the suffering caused by the long wait, which charities and councils have said is leading to evictions and increased use of food banks.
The chancellor will also allow housing benefit to continue for an extra two weeks after an application for universal credit has been submitted, to reduce the threat of eviction.
His U-turn was partially welcomed, but Labour and other opposition parties said it did not go far enough in addressing problems with the new system, which is designed to roll six existing benefits into a single monthly payment.
Jeremy Corbyn, the Labour leader, called on the government to “pause and fix” the rollout instead of making minor changes, as people were still facing delays with their claims and threats of eviction.
Under the measures unveiled in the budget, the chancellor cut the time people have to wait for their first payment by seven days and promised that hardship loans could be repaid over a year rather than six months.
The measures to ease the financial difficulties of new claimants amount to about £300m a year. In the small print of the budget book, it was revealed the rollout of universal credit was being slowed down, with a more gradual introduction to jobcentres by December 2018.
The dozen Conservative MPs who fought for changes to the system were delighted with the one-week reduction after the government had initially refused to reduce the wait.
David Gauke, the work and pensions secretary, had defended the working of the system as recently as Tory party conference in October, announcing only minor changes to the hardship loans at the time.
Heidi Allen, the Conservative MP leading the calls for change, said the announcement was “a victory for common sense and compassion”.
She told the Guardian: “The government had struggled to technically get the system to reduce any further than five weeks, but what they have done instead, by offering housing benefit to be carried across for two weeks, is tremendous. All the risks of homelessness and rent arrears, it deals with it straight away.”
Iain Duncan Smith, the former work and pensions secretary who was behind the introduction of universal credit, said: “The chancellor is absolutely right to make advances more readily accessible for claimants waiting for their first instalment of benefits. No one should have to wait excessive periods to receive their first payment.”
However, opposition parties, charities and trade unions were underwhelmed by the changes.
Frances O’Grady, the general secretary of the Trades Union Congress, said it was a “small step forward, but big changes are needed or working people will be left thousands of pounds a year worse off”.
Corbyn said the verdict on the frontline was that food bank use increases 30% wherever universal credit is rolled out.
“This chancellor’s solution to a failing system causing more debt is to offer a loan. And the six-week wait, with 20% waiting even longer, becomes a five-week wait,” he said.
“This system has been run down by £3bn cuts to work allowances, the two-child limit and the perverse “rape clause”; and caused evictions because housing benefit isn’t paid direct to the landlord. So I say to the chancellor: put this broken system on hold, so it can be fixed, and keep a million more children out of poverty.”
Stephen Lloyd, the Liberal Democrat work and pensions spokesman, said the rollout “must be paused before even more of our most vulnerable citizens are made to suffer on the ideological anvil of this Conservative government”.
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