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‘No need’ for stop-gap payments for new Universal Credit recipients

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The government said “there is not a need” for an earlier allowance for new Universal Credit claimants despite calls to introduce stop-gap payments so people don’t have to wait weeks for the benefit.

In October, an influential group of MPs called for ‘starter payments’ to provide financial support for Universal Credit applicants who have to wait weeks for the benefit.

Equivalent to three weeks of the standard allowance –  £288 for a single person over the age of 25 – the Work and Pensions Committee said this would stop people facing a difficult choice of five weeks with no income or the risk of debt and hardship later on.

It has today published the government’s response to its recommendations set out in its Universal Credit: the wait for a first payment report published towards the end of last year.

On the ‘starter payments’ suggestion, the government said: “There is not a need for a starter payment in UC as New Claim Advances are available urgently to claimants if they are in need of financial help.

“As a result, nobody has to wait for a payment in UC. Claimants who require an Advance will have their UC award spread across thirteen payments in a year rather than twelve. From October 2021, we will give claimants the option to spread twenty-five payments over twenty-four months.”

The committee of MPs was also disappointed that in response to its other recommendations, the government refused to conduct or commission any research on possible links between UC and rising foodbank use, increased rent arrears and psychological distress.

Further, it also refused to commit to extend the £20 weekly uplift in UC, brought in at the start of the coronavirus pandemic. It is scheduled to end after March 2021.

‘Financial dread for many families’

Stephen Timms, chair of the Work and Pensions Committee, said: “Our report put forward a set of practical and costed proposals intended to offer a constructive way of mitigating the worst effects of the wait for a first payment of Universal Credit. The government has dismissed those proposals out of hand – and in some cases, simply ignored them.

“Worst of all, ministers are refusing point blank even to do any research that might help them understand the impact that the five week wait is having on people. Our inquiry heard that the wait may be linked to rising reliance on foodbanks, spiralling rent arrears and even increased psychological distress. It’s astounding the government won’t even look closely at those findings, let alone do anything about them.”

Timms added that the new lockdown will have brought “a renewed sense of financial dread for many families”.

He said: “The government could have softened that blow by announcing it would maintain the £20 weekly increase in UC past April. Instead, it has chosen to keep households in the dark over whether this much-needed lifeline will continue.

“We are not alone in pressing for action on the wait. Voices from across the political spectrum, inside and outside parliament, are calling for change. It’s time DWP took the blinkers off and started to look at the real impact of the five week wait.”

‘We’ve supported an unprecedented increase in claimants’

The DWP response included: “The Committee has repeatedly pointed out how well UC has performed across the pandemic. We have adapted our processes and practices in an agile way, enabling us to support an unprecedented increase in claimants whilst responding to the specific challenge of working in a world of social distancing. Payment timeliness has remained high at above 90% for the duration of the pandemic despite there now being 5.7m individual claims.

“No one has to wait five weeks for a payment. Advances – which allow thirteen UC payments to be spread over twelve months – are available for those claimants who require funds urgently, with most people receiving funds within 72 hours of requesting one. We have paid out over a million new claim advances since mid-March and this has been a crucial pillar of the government’s response, ensuring financial supports gets to those who need it.”

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