Jennifer Harrison, Head of Policy and Public Affairs, Changing Lives
Today, Changing Lives gave oral evidence to the House of Commons Work and Pensions Committee’s inquiry into the initial wait for first payment of Universal Credit.
Changing Lives is a national charity, each year helping over 14,000 people who are experiencing multiple disadvantage to change their lives for the better. This includes supporting people who are experiencing homelessness or living in supported accommodation, people who are involved in the criminal justice system, and people who are experiencing other difficult circumstances, such as addiction, involvement in selling sex or fleeing exploitation and/or abuse.
The people we work with are experiencing significant challenges in their lives, often compounded by existing vulnerabilities such poor mental health and past experiences of trauma. Very often, they find themselves trapped within cycles of harm from which it is difficult to escape.
Many of the people we support are eligible for, or are claiming, Universal Credit. We support the policy intent behind Universal Credit to simplify the benefits system, but in practice we see that it is playing a significant role in creating and exacerbating deprivation for people who are already struggling.
The initial wait for payment, coupled with advance payments, is a primary reason for this – driving the people we support further into poverty, and placing them at increased risk of exploitation and harm.
Five weeks is too long to wait
The current design of Universal Credit is based on payment in arrears, paid approximately seven days after a one-month assessment period (so five weeks in total). A claimant’s income during the assessment period determines the amount of Universal Credit owed, and this process is repeated for the duration of a claimant’s entitlement to the benefit. The policy intent behind this is to replicate the world of work, equivalent in structure to a monthly salary payment.
However, this is untenable for many of the people we support, who do have a safety net and often apply for Universal Credit without having any other source of income at all. Often, they are not ready for the work environment, do not have savings, lack a support network of friends and family to assist them, and may already be experiencing significant financial hardship including rent arrears, food poverty and debts to numerous creditors.
This is made all the more challenging because, very often, what is supposed to be a five week wait for the first payment of Universal Credit ends up being far longer. Our teams believe that, on average, the people we support wait between 6 and 8 weeks for their first payment of Universal Credit to be made.
This can be because they face systematic communication barriers in making an application, including lack of access to a computer, the internet or the digital skills to make a claim, or because they do not possess the basic requirements to make a Universal Credit claim, such as ID, proof of address, or a bank account.
Advance payments provide little relief
In 2017, the Government introduced the option of an advance payment to help alleviate the burden of waiting for the first payment of Universal Credit, which is a loan that must be repaid. The people we support are very likely to require an advance payment to make ends meet. In our view, this is setting people up to fail, by placing them in debt before they have even begun to access their benefit.
We have supported people who have been given £250 as an advance payment with no indication of how long this should last. They are left with a stark choice of whether to ‘eat or heat’, sometimes exacerbated by having to repay existing debts – leaving them with nothing.
As a result, we see people building up increasing rent arrears and other debts, becoming reliant food banks and soup kitchens, and resorting to desperate measures including begging, shoplifting or selling sex just to make ends meet. We have supported people who have found themselves homelessness as a direct result of Universal Credit, where exploitation becomes more likely and leading to a range of concerning health outcomes such as anxiety, depression, and malnutrition.
Even when Universal Credit is in place, advance payments have a lasting impact – with rates of repayment of up to 30% meaning that people who are already experiencing hardship are then expected to live on far less than their Universal Credit entitlement until the debt is repaid and may actually be in deficit once other deductions have been applied.
The impact on people we support
The damaging impact of a first wait for Universal Credit is pervasive across all our services.
For people who have experienced homelessness, this can be hugely stressful, as they are naturally anxious to maintain their tenancy. We find that people can feel very worried by the prospect of having to manage an advance payment and first installment of Universal Credit that is paid as single universal benefit intended to include rent, rather than having a separate housing entitlement or option to pay direct to a landlord (although this can be set up later).
This becomes more challenging again given that a disproportionately high number of people with experiences of homelessness have complex support needs, including relating to addiction. The payment of Universal Credit on a regularly infrequent basis can have a hugely destabilising impact for people experiencing addiction, leaving them vulnerable to significant harm.
People in other circumstances are just as affected – for example, the challenges posed by the initial wait for payment is particularly stark for people released from prison because they cannot apply for Universal Credit in advance of their release. Frequently, the people we support leave prison facing significant financial difficulty, making them vulnerable to reoffending through acquisitive crime, returning to an abusive partner, or turning to survival sex to avoid homelessness and destitution.
What is the solution?
It is our view that the most effective way to alleviate the hardship experienced by people waiting for an initial payment of Universal Credit is to remove or significantly reduce the five-week wait. However, this is not currently the stated intention of the Government.
As an alternative, the Work and Pensions Committee has previously suggested that a non-repayable grant be introduced to support the most vulnerable claimants. We support this and would go further, suggesting that all advance payments become non-repayable grants – on the basis that people may find it difficult to disclose challenges in their lives that may make them more vulnerable, and the expectation that they do so may simply create more barriers to making a claim.
Today’s Committee gave us an opportunity to call on Government to alleviate the pressures created by the initial wait for Universal Credit. It is only by ensuring that people are able to afford what we should all be able to expect – enough money to live on, and to provide a roof overhead – that they are able to move towards a flourishing life.