The Work and Pensions Committee recently published the government response to its report titled Universal Credit: The wait for a first payment.
The report was published during October in a public plea against the lengthy time taken for the initial Universal Credit installment to be paid. Applicants for the social security payment are kept waiting five weeks for their claim to process.
Credit claims in Covid crisis
2020 saw the demand for Universal Credit (UC) soar, as businesses were forced to close and employees were either furloughed or made redundant. Claimaints increased during April last year by 1.2m people (40%) in just one month. This was almost 10 times the monthly increase of April 2019, and has only escalated since.
Many accountants will have been dealing with self employed individuals who have seen a significant fall in income or have found that they were not eligible for coronavirus support grants, such as the self employed income support scheme or the furlough scheme.
With the economic climate getting tougher on small businesses, the self-employed or unemployed, the government grant has served as a lifeline for countless individuals within the UK.
However, the Work and Pensions Committee report highlighted evidence that showed a vast amount of people were struggling financially during the wait for the first Universal Credit payment.
“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,” said Stephen Timms, MP and chair of the Work and Pensions Committee.
Citizens Advice and the Trussell Trust were included within the Committee’s enquiry, giving feedback on the hardships endured during the anticipation of the initial installment.
The report contained various recommendations for the government to respond, including the launch of a starter payment for all first-time applicants. They proposed a sum equivalent to three weeks of the usual monthly allowance (around £288 for a person over the age of 25).
The Committee also proposed revisions to the way that historic tax credit debt is clawed away from applicants once they enroll on Universal Credit.
Government response
However, the government's response has not been successful in tackling the aims of the report. It outright refused to conduct or commission any research exploring possible links between increasing Universal Credit claims and the rising rates of rent arrears, foodbank necessities, and reports of psychological distress.
It also stated that there is "no need" for a starter payment plan, on top of refusing to extend the £20 weekly increase in Universal Credit payments that was introduced when the pandemic started. This is set to cease this April.
“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,” commented Timms. “It’s time DWP took the blinkers off and started to look at the real impact of the five week wait.”
These benefits are intrinsic to the economy and its people, and the unsatisfactory response from the Government has fallen upon many as a wasted opportunity to fix glaring flaws in an otherwise promising system.
The third national lockdown measures have increased the level of financial dread throughout the country, with the need for support more vital than ever. While this report was a chance to extend that support, the government has instead “chosen to keep households in the dark,” said Timms.
“Ministers are refusing point blank even to do any research that might help them to understand the impact that the five week wait is having on people,” Timms continued. “It’s astounding that the government won’t even look closely at those findings, let alone do anything about them.”
Members of the Work and Pensions Committee will have the opportunity to discuss the government’s response with the Secretary of State on 3 February.
