Six Week Wait for Universal Credit Isn’t a ‘Delay’ - It’s a Damaging Policy Decision
Universal credit (UC) is fast threatening to turn into universal debt. Unusually, the hardships faced by social security claimants have become headline news as the accelerated roll-out means a growing number of MPs have constituents affected by the problems it is creating. The most immediate of those problems is the six weeks (and sometimes more) a claimant has to wait before receiving their first UC payment. The six weeks wait is not a ‘delay’, as it is often described in the media, the implication being we’re talking about administrative inefficiency or teething problems. Rather, as the briefing prepared by the House of Commons library for yesterday’s debated underlined, it is ‘a deliberate policy decision’. Indeed in responding to Labour’s motion yesterday, the Work and Pensions Secretary told MPs that ‘we have to remember that a waiting period is fundamental to the structure of UC, which pays people monthly, mirroring the world of work’. Of course that begs the question: how many workers have to wait six weeks for their first wages?
The six week waiting period reflects two separate policy decisions. The first, as the minister explained, is that UC is assessed and paid monthly in arrears. This affects far more than just the first payment. The move from fortnightly to monthly payments was ideologically motivated – part of the broader aim of ‘behavioural change’. ‘Mirroring the world of work’ is supposed to ‘encourage’ paid work. When it was pointed out during the passage of the Welfare Reform Bill that the government’s own statistics showed one in four employees is not paid monthly (including around half of those earning less than £10,000 a year), this was simply discounted; there was a sense that ministers simply believed that ‘they’ should learn to budget like ‘us’, as if monthly budgeting were a moral virtue. But research into how families (read mothers in practice) actually budget indicates enforced monthly budgeting is likely to cause major problems for a potentially significant minority. Evidence to the Work and Pensions Select Committee and in a recent Citizens Advice report suggests this is indeed the case, particularly for ‘vulnerable’ claimants. Monthly payments are not in fact integral to the UC architecture, and we need to continue to press the government to follow the example of Scotland and Northern Ireland and either revert to fortnightly payments or at the very least allow people to claim fortnightly if they prefer.
The other source of the six week wait is the increase in the number of ‘waiting days’ before entitlement commences from three to seven. When proposing it, the government acknowledged that this was primarily a cost-saving measure. It was widely predicted at the time that it would create considerable hardship for UC claimants both because of payment monthly in arrears and because UC incorporated help with housing costs and support for children (unlike jobseeker’s allowance and employment and support allowance). As a result, the government’s own Social Security Advisory Committee rejected the proposal, and the argument now trotted out by ministers that the availability of advance payments means there is no real problem. Even if, as now promised, advance payments are made more easily available, they cover only half the estimated award at most and have to be repaid through deductions from future UC payments. Even Lord Freud, chief architect of UC, has now questioned the waiting days, when giving oral evidence to the Work and Pensions Committee.
Already the evidence from Citizens Advice is that UC is pushing people further into debt. The National Landlords Association has just reported that four out of five landlords are now reluctant to let to tenants in receipt of housing benefit or UC. Food banks are buckling under the strain. Child Poverty Action Group has estimated that if all the cuts made to UC since it was first mooted were reversed, up to 1 million children could be kept out of poverty. As it is, they calculate lone parent families will lose a huge £2,380 a year on average by 2020.
There are rumours that, having put up the white flag in yesterday’s debate by ordering their MPs to abstain, the government may come forward with a concession to reduce the waiting period from six to four weeks. While this would be an improvement, it mitigates rather than solves the problems faced by people claiming UC with little or no money to fall back on. And it does nothing to address UC’s design flaws or the deeply damaging cuts to which it has been subjected. This is why it's essential that the roll-out of UC is paused to allow for a more fundamental re-think.
Ruth Lister is a Labour Peer, an Emeritus Professor at Loughborough University and Honorary President of Child Poverty Action Group.