Written evidence from Universal Credit Action Network UCAN [UCW0009]

 

 

CORONAVIRUS IMPACT: A LESSON FOR US TO LEARN

 

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

Response to the Parliamentary Committees 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?

 

UCANS 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.

 

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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 grass roots activists who are genuinely concerned about the level of poverty in their community.  They seek to establish a forum free from the worries of Service Level Agreements and fundersinfluence, 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 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. Most importantly how the welfare and general well-being of communities are understood. 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 and advice, 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 appeal processes. However, since the outbreak of coronavirus, UCAN has been providing telephone advice and information, email support and live Facebook advice sessions every weekday 1-2pm. Individuals have also made contact via its UCAN website - onlineucan.org.

 

During a number of forum meetings organised the Institute of Money Adviser, debt advisers asked Ripon Ray,  one of the founders of UCAN about seeking advice on issues  relvant to their clients. Ripon Ray was also invited to community radio shows such as with Revive FM, Relaks Radio, Betar Bangla Radio and East London Radio and responded to members of the public’s query on the phone. Based on these queries, UCAN was able to obtain information and make this submission to the inquiry.

 

 

UCANS EXPERIENCE

 

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

 

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 by stating that she had:

 

Borrowed money from friends.  

 

UCAN dealt with a case via its website - onlineucan.org. 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.’ 

 

DWPs 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 to work,  but to what extent it is designed to address eradication of poverty? 

 

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. One parent that contacted UCAN 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.

 

 

 

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RECOMMENDATIONS

 

-      To remove five weeks wait because it goes against the spirit of poverty reduction; most importantly in times of great economic, financial, 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 tenants 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 the consequence of recovery leads to financial hardship. Under legacy benefit, it is not recoverable. On UC it is curently 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 child care provider from when requested by the registered service provider instead of being provided by the claimant.

 

April 2020