UCAN's Response to Parliamentary Inquiry on Universal Credit

UNIVERSAL CREDIT

ACTION NETWORK 

CORONAVIRUS IMPACT: A LESSON FOR US TO LEARN 

Universal Credit: the wait for a first payment  - an Inquiry 

Response to the Parliamentary Committee’s acceptance of evidence to call on Universal Credit: 

The wait for a first payment

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‘TO WHAT EXTENT HAVE THE MITIGATIONS THE GOVERNMENT HAS INTRODUCED SO FAR (E.G. ADVANCE PAYMENTS) HELPED TO REDUCE THE NEGATIVE IMPACT OF THE FIVE WEEK WAIT FOR UC CLAIMANTS?’

UCAN’S RESPONSE: A SUMMARY

Universal Credit Action Network (UCAN) believes that a reduction from six to five weeks waiting period has not made any significant improvements to the financial position of claimants on Universal Credit (UC).  Peobody Trust, one of the largest housing associations in the country, mentioned in its published report in October 2019:  The Impact of Universal Credit, which outlines that 76% of Peobody Trust tenants on UC are in rent arrears. It also stated that five weeks waiting period has been the main factor in the cause of rent arrears. 

Advance Payment is not the solution for those who are struggling financially because it gets recovered from UC payment - leading claimants into further financial hardship.   UCAN recommends that the payment is replaced by a grant scheme.

Finally, removal of the five weeks waiting period; reducing it to either weekly or fortnightly to reflect the actual need of claimants who  are in employment, unemployed, unable to work and accommodate their rent payment.

INTRODUCTION OF UCAN

UCAN was formed by a group of academics,  welfare rights, money and debt advisers, human rights lawyers, UC claimants, trade unionists and grassroots activists who are concerned about the level of poverty in their community caused by welfare reform.  They seek to establish a forum free from the worries of Service Level Agreements and funders’ influence, but are experts in their areas of work. UCAN meets, as a group, frequently to share their experiences in order to create a supportive environment and to identify issues of concern, campaign, education and policy solutions for the benefit of claimants who are vulnerable due to the economic shock of their low income.

The outbreak of coronavirus has significantly changed the landscape of every aspect of  the British economic life. The pandemic has exposed the fragility of the welfare system that requires serious reform for the interest of those in need and to protect them from actual/potential financial shock in order to eradicate poverty.

CHANNELS USED BY UCAN

UCAN provided public training sessions, produced specialist YouTube videos that have been verified by welfare rights, debt and legal experts,  drafted template letters to support individuals in times of financial difficulties and the appeal processes. However, since the outbreak of coronavirus, UCAN has been providing information. Individuals have also made contact via its UCAN website - onlineucan.org. 

During a number of meetings organised the Institute of Money Advisers,  a number of debt advisers asked Ripon Ray,  one of the founders of UCAN about seeking advice on issues  related to their clients. He was also invited on community radios  - such as with Revive FM, Relaks Radio, Betar Bangla Radio and East London Radio and he responded to queries from the members of the public on the phone. Based on these queries, UCAN was able to obtain information and make the submission to the inquiry.

UCAN’S EXPERIENCE

A UCAN representative  discussed with a claimant during a public educational training in Tower Hamlets prior to Covid-19 outbreak in November 2019. An audience on UC was asked about her experience of being on UC by the trainer.

‘My experience is great. If my income increases, UC benefit reduces.’ 

The same claimant was then asked by a member of the public as to how the claimant was able to survive whilst waiting for the first payment. The claimant replied: 

‘I borrowed money from friends.’  

UCAN dealt with a case via its website. The query stated that:

‘Whilst I was waiting for money, I applied for a personal loan to cover the cost because I was too afraid of missing my rent payment.’ 

DWP’s system does not take into consideration that a number of workers on low income are paid either weekly or fortnightly.  Although the initial argument for setting up UC was to get people back to work,  but to what extent it's designed to address poverty reduction?  

The current UC model increases poverty, as we have noticed from the data provided by Trussell Trusts, Child poverty Action Group and other organisations. Also, for parents who wait for child care costs required to pay upfront for nurseries whilst DWP pays in arrears. a single parent contacted UCAN and said: 

“I am a single mother, got a part time job, moved to full time work, claim universal credit and I have to wait for over a month to pay child care cost is way too long.’ 

RECOMMENDATIONS

• To remove five weeks waiting period because it goes against the spirit of poverty reduction; most importantly in times of economic, social and psychological upheaval and insecurity;

• UC needs to be flexible to the actual needs of claimants. If the claimant’s salary is paid weekly or fortnightly it needs to meet their need. Vulnerable workers such as zero hours contracts and low income workers, require regular income without the worries of waiting for five weeks in the initial period;

• Rent is calculated weekly, and UC need to mirror it to reflect the demands of tenant’s need and it need to be paid directly to the landlord,  to prevent homelessness - from when the claim starts;

• If there are conflicts with regard to changes of circumstances, Housing Element of UC should carry on being paid to prevent homelessness; instead of closing the claim;

• Overpayment of benefits and official error - overpayment should not be recoverable because of consequence of recovery leads to financial hardship. Under legacy benefit, it's not recoverable. On UC it is currently recoverable;

• Advance Payment leads to poverty because it’s recovered from UC. Therefore, a grant model is more suitable;

• During the initial UC claim, child care cost be paid directly to the registered child care provider from when requested by the  provider instead of being provided by the claimant.

03/04/2020

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