Chair of the Work and Pensions Select Committee, Frank Field MP, a cross-party group of MPs charged with holding the government to account on welfare and social security issues, has described new evidence on the impact of Universal Credit as the “most damning” he has ever read.
The Labour MP says evidence submitted to the Committee by the Halton Housing Trust shows how the Department for Work and Pensions (DWP) is mishandling the roll-out of the Government’s flagship welfare reform.
The Trust has accumulated over £400,000 of arrears as a direct result of the roll-out of Full Service Universal Credit, meaning just 18% of its tenants now owe 55% of all its arrears, resulting in a doubling in the number of people referred by the Trust to food banks over the last 12 months.
The Trust says Universal Credit claimants are often “miscategorised” for ‘Advance Payments’ while their claim is being processed by the DWP.
The news comes as pressure mounts on the government to reduce the mandatory six-week wait (minimum) for a Universal Credit payment, as DWP ministers continue to defend the policy by claiming Advance Payments are available for anyone struggling to cope with the long wait.
In a sample of 1,252 tenants the Trust found that the majority of claimants were eligible for a Benefit Transfer Advance while being moved from a so-called legacy benefit (like Jobseeker’s Allowance) onto Universal Credit. This is paid back during the first 12 months of a Universal Credit claim.
Those claimants who were offered Advance Payments were offered a New Claims Advance that had to be paid back within 6 months: the submission details the even bigger financial problems this caused for families.
In addition, the evidence reports:
- The Department refuses to amend the recovery period of the Advance Payment, from 6 months to 12 months, even in the instances where they acknowledge that the claimants should have had a Benefit Transfer Advance.
- Recovery of the Advance Payment commences immediately with the first Universal Credit payment. This means claimants are continuously playing catch up and are instantly put in debt when the repayment is deducted.
- As the Advance Payment of either kind are recovered directly from the Universal Credit award, they are being given priority over other essential/actual priority outgoings.
- When Advanced Payments have been provided there is a lack of any explanation to the customer that this includes a personal allowance and housing cost element. In many cases customers are unsure as to what the money they are receiving is for or what the levels of Advance will be.
Frank Field also criticised a lack of budgeting advice given to new Universal Credit claimants.
Halton Housing Trust found that this advice was not available to the vast majority of applicants. This is despite it being an essential element for many applicants at the start of the Universal Credit application process.
Local Authorities have been awarded funding to offer Personal Budgeting Support. Despite this, the number of referrals made by the Department locally in Halton has been very low.
Other problems highlighted by the Trust include:
- Many employers choose to pay their employees early before the Christmas period. The Universal Credit regulations consider this as an increase in income and not an early payment. This triggers a review of their claim, with no payments being made until the end of the subsequent month (January).
- A lack of coordinated approach between the NHS and DWP. The Trust has recently supported a tenant who received a £50 fine for ticking the “JSA” box on a prescription form, because the form has not been updated with a “Universal Credit” option for receiving free prescriptions, and there are no plans to do so.
- The Universal Credit application prompts a cessation of Healthy Start vouchers if the claimants were previously in receipt along with their legacy benefit. The Healthy Start system does not yet recognise Full Service Universal Credit.
Frank Field said: “It would be difficult to think, in all my period of Chair of the Select Committee, of a piece of evidence that is so damning on the DWP maladministration which is mangling poorer people’s lives.
“This maladministration is throwing Universal Credit claimants’ finances into chaos.”