Steve McCabe MP for Birmingham Selly Oak sits on the Work and Pensions Committee who in their latest report say a starter payment should be made to people claiming Universal Credit (UC) for the first time to ensure that everyone has enough money for basics such as food and heating during the wait for their initial monthly payment.
The Committee’s report 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 payments for those in need can provide a valuable financial lifeline, the Committee is concerned that some people are unable to afford the required repayments.
The Committee warns that this leaves people with a difficult choice: five weeks with no income, or the risk of debt and hardship later. The report concludes that 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 that they will need to be repaid. The DWP should also recognise that a request for a loan is a clear indication that 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
Committee member and Birmingham MP Steve McCabe MP said:
“The five week wait for Universal Credit is causing hardship in Birmingham and across the UK. In my role on the Work and Pensions Committee I’ve heard evidence that claimants are falling into debt to pay off advances. Our benefit system should be protecting people from financial hardship, instead of perpetuating it.
The committee is now calling on the Department for Work and Pensions to make the £20 per week UC increase permanent and introduce a starter payment to compensate claimants for the five week wait”