MPs call for new 'starter payments' for Universal Credit | Rent Income Excellence Network news

MPs call for new 'starter payments' for Universal Credit

The Work and Pensions Committee has said that government need to introduce a starter payment for Universal Credit claimants, to avoid the hardship of the five week wait or "debt and hardship later".

The Committee's report on Universal Credit: the wait for a first payment finds that the current wait of at least five weeks causes difficulties for some households.

While the existing system of Advance pay-ments for those in need can provide a valuable financial lifeline, the Committee is concerned that some are unable to afford the repayments.

The Committee warns this leaves people with a difficult choice: five weeks with no income, or the risk of debt and hardship later.

The report concludes the introduction of a new payment — equivalent to three weeks of the standard allowance — would be a simple way of ensuring that new claimants had the money they needed for basic living essentials. For people moving from existing benefits, DWP should make the move seamless wherever possible — and pay a starter payment in other cases.

Advances should still be available for people who need further support to get by, but they should be renamed 'new claim loans' to make clear they will need to be repaid. The DWP should also recognise a request for a loan is a clear indication someone is struggling and offer support as early as possible.

Reflecting evidence from Sir Iain Duncan Smith, among others, the Committee has also called for changes to the way that historic tax credit is clawed back from people when they move to Universal Credit—and for DWP's debt collection to follow best practice in the private sector.

In addition, the Committee calls on the Government to make permanent the £20 per week increase in the standard UC allowance announced in response to the coronavirus pandemic.

Stephen Timms, Chair of the Work and Pensions Committee, said: "There is a growing body of evidence that moving to Universal Credit leaves many reliant on food banks, falling seriously behind with their rent, and even experiencing increased levels of psychological distress.

"The Government's response is that there is no proof that Universal Credit—and in particular the wait for a first payment—is the direct cause of those difficulties. So DWP needs to commission research, and quickly, to find out what lies behind these deeply worrying findings. Our social security system should not be leaving people without the money they need for food and heating.

"In the meantime, the Government must face up to the fact that its current system of Advance loans simply isn't working. They leave people facing the toughest of choices: go without income for at least five weeks, or have repayments subtracted from their future UC payments—which are already barely enough to get by on.

"We cannot understand why people who are already claiming benefits need to wait for at least five weeks when they move to Universal Credit—especially when nothing in their lives has changed. Their move should be seamless.

"For people claiming benefits for the first time, or people who've faced a significant change in their circumstances, the Government should provide starter payments. Doing so would both cut down on the need for Advance loans and ensure that nobody is forced into debt just to be able to afford to eat and keep a roof over their heads.

"UC is a highly automated system. That has been a real strength over the last few months, with the huge influx of new claims caused by the coronavirus pandemic. But it can also be a major weakness, leaving people without the tailored support they need, and Ministers unable to make the changes they want to see.

"There is much the Government can do without completely dismantling the UC system: we hope that our proposals, taken together, offer practical solutions for making Universal Credit work for everyone who needs it."

A full copy of the report can be found here.