Written evidence from Macmillan Cancer Support [UCW0037]

Introduction

1. Macmillan Cancer Support is a registered charity providing Information and support for people with cancer. This includes specialist support to help manage the financial impact of a person’s cancer diagnosis.
2. Alongside the physical and emotional impact of cancer, a diagnosis also brings with it a risk of financial hardship. Four in five people with cancer are on average, £570 a month worse off as a result of their diagnosis. [1]
3. Extra costs can range from paying for travel to and from hospital to increased energy bills due to feeling the cold more.  More than half (54%) of people with cancer experience increased day to day living costs of, on average £63 a month.  In addition, to the extra costs brought on by a cancer diagnosis, one in three people with cancer also experience a loss of income from employment, losing on average £860 a month. [2]
4. Macmillan’s submission draws upon our expertise in the welfare system. Macmillan’s Welfare Rights Advisers provide specialist support to people living with cancer accessing support from the welfare system, including making claims for Universal Credit (UC). In 2018, Macmillan’s face-to-face benefits advisers reached 140,982 people affected by cancer. Our Support line service’s welfare rights team supported 25,152 people living with cancer. [3]
5. Macmillan Cancer Support welcomes the opportunity to respond to the Work and Pensions inquiry on Universal Credit: the wait for a first payment. Macmillan will answer the following questions laid out in the call for evidence:
1. 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? - What problems do claimants still experience during the five-week wait?
2. What is the best way of offsetting the impact of the five-week wait? 

Executive Summary

6. Many people with cancer face a financial shock at the point of diagnosis and waiting five-weeks for their first Universal Credit payment puts them at risk of additional stress, anxiety and hardship.
7. The wider financial implications of COVID-19 are likely to make the need for support even more urgent.
8. We hear from Macmillan’s Welfare Rights Advisers that many people have been forced to borrow from friends and family during the five-week wait for the first UC payment.
9. Macmillan is calling for the Department to remove the five-week wait completely, rather than having to mitigate the negative impact of delays. So that people with cancer get quicker access to the support they need.
10. In the meantime, the DWP should offer non-repayable grants to anyone who needs them.
     

Question 1: 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?

11. Macmillan believes the Government should remove the five-week wait for first payment in UC, as the measures introduced to mitigate some of its impacts are not working.
12. A number of welcome changes have been announced by the chancellor in response to the Covid19 outbreak, including the increasing in the rate of the basic allowance of UC and suspending the recovery of benefit overpayments. While these changes will benefit many people applying for UC, the system is still not responsive to claimants’ immediate financial needs.
13. The need for quick access to financial support is more vital now than ever. Many people with cancer face a financial shock at the point of diagnosis and waiting five-weeks for their first Universal Credit payment puts them at risk of additional stress, anxiety and hardship.
14. Advances are the main mitigation that the Government has put in place for those who are not able to afford to wait five-weeks before their first UC payment. However, we hear from Macmillan’s Welfare Rights Advisers that many people have been forced to borrow from friends and family during the five-week wait for the first UC payment.
15. Between July 2018 and December 2019 inclusive there were nearly four million claims for UC and 2.5 million advances paid out to nearly two million claimants. (As claimants can make more than one request for an advance if they believe they require additional funds, depending on their exact personal circumstances). Therefore, around half of those who made a UC claim also requested an advance.[4]
16. Advances are deducted from subsequent payments and require debt in the long-term to avoid short-term hardship. For people with cancer, particularly those who are undergoing treatment or approaching the end of their lives, being forced to accrue debt in this manner is inappropriate and can cause additional anxiety and stress.
17. It is particularly concerning that outstanding debts from advances can be passed on to their family or friends when they pass away.[5] For those who may have other debts deducted directly from their UC award, their income can be significantly depleted by an advance repayment, at a time when they are likely to be facing increased costs due to their diagnosis.
18. “It just felt like the system wasn’t set up to support anyone living with cancer. The whole process just seemed so clinical, I kept thinking ‘where’s the compassion in this system?’” A person living with cancer
19. Macmillan’s support line service has received calls from people living with cancer stating they want to avoid making a claim even if they would be financially better off by moving to UC, due to not having the savings to support themselves and their families during the five week wait for the initial payment. While advance payments are available, people with cancer do not want to take these out due to fear of accruing further debt.
20. “I’m extremely worried about the prospect of moving over to Universal Credit with no spare money to save for an extra five weeks. It makes no sense.” A person living with Cancer.

What problems do claimants still experience during the five-week wait?

21. Administrative delays and errors mean people wait even longer than five weeks before receiving their first UC payment.
22. Delays often occur during the assessment phase of UC and these delays are often complex and difficult to resolve. For example, evidence from Macmillan’s network of benefits advisers indicates that people with cancer are experiencing delays in referrals to a WCA, including cases of people waiting longer than four weeks to receive a UC50.
23. These delays can impact the level of support people get. For example, if the Limited Capability for Work- and Work-Related Activity element is not added or if the claim is delayed as a result.
24. Macmillan’s Welfare Rights advisers have supported people with cancer who have had to cut back on household essentials or have struggled to keep up with rent or mortgage due to the five-week wait for their first payment.
25. A Macmillan survey of Macmillan Benefits Advisers, Jun-Oct 2018 found that 86% had supported people with cancer who experienced financial hardship during the five-week wait; 80% had supported people with cancer who had struggled to pay their mortgage or rent and 76% had supported people with cancer who had cut back on household essentials while waiting for payment.[6]
26.            ‘One of my clients has now fallen into rent arrears due to the waiting time for Universal Credit to be processed.’ – Macmillan Welfare Rights Adviser

Question 2: What is the best way of offsetting the impact of the five-week wait?

27. The wider financial implications of COVID-19 are likely to make the need for support even more urgent, particularly for people living with cancer who already face additional costs as a result of their diagnosis. Macmillan has been calling for the Department to remove the five-week wait completely, rather than having to mitigate the negative impact of delays, so that people with cancer get quicker access to the support they need.
28. To recognise the immediate financial needs of people applying for UC, we believe that there should be no arbitrary waiting time built into the application of UC and instead, claimants should be paid as soon as their application is processed.
29. Ending the five-week wait will involve a significant structural change to the way UC is paid, as it will involve greater flexibility in payment cycles and upfront payments as opposed to payments in arrears. We recommend that the DWP should begin to pilot options that would work best for claimants. Any changes to the structure of UC payments should be based on the principle that the system should not push people into further debt from the outset.
30. The Department has argued that removing the five-week wait entirely is not operationally feasible in the current climate. However, we believe that the Government should explore ways to make structural changes to the way UC is paid. In the meantime, the department should explore the following mitigations (in order of impact/preference): to pay advances as non-repayable grants, to issue fortnightly payments of Universal Credit or to suspend deductions.
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32. The most straight forward way of mitigating the impact of the five-week wait in the short-term is to offer advances as non-repayable grants, as the mechanism for offering advances is already in place. It would ensure that people receive immediate financial support without the prospect of accruing debt further down the line.
33. Recent communications from the Department to stakeholders have indicated that advance payments will not be reviewed, as the financial impact of repaying an advance will be absorbed by the increase of the Universal Credit standard allowance announced by the Chancellor. This is very concerning. The uprating of Universal Credit was welcome recognition that the welfare system is often not providing enough support for people to manage. Allowing uprated levels to be eroded by deductions for advance repayments undermines the welcome extra support provided by the Government. In terms of long-term support, this will create a discrepancy between people who are able to afford to wait 5 weeks before being paid and those who can’t.
34. Another option is to introduce greater flexibility in payment cycles. We know the department has the facility to arrange a fortnightly payment as part of an Alternative Payment Arrangement. This could be brought forward to the assessment phase of the UC claim, so that claimants would not have to wait longer than 3 weeks for the first payment.
35. Another short-term option could be to suspend all debts that are recovered by the DWP. Research carried out by StepChange shows that deductions from UC payments for other debts such as benefit overpayments and rent arrears pushes people into further financial hardship.[7] This is exacerbated by the fact that people are not always aware of these debts until they move on to UC, which makes budgeting more difficult.
36. We welcome the recent announcement that DWP will suspend the recovery of benefit overpayments for 3 months, as this will mean many people will not be affected by an unexpected reduction in their monthly UC payments. The 2020 Budget announcement to reduce the maximum debt recovery rate to 25% of the UC standard allowance from October 2020 is also positive and suggests that there is scope to reduce it further.
37. Given the immediate financial difficulties that claimants are likely to be facing when they first apply for UC, it is unreasonable to expect people to pay back debts until it is more financially viable for them to do so. Suspending all deductions from UC payments, including advances, would therefore mitigate the impact in the very short-term.
38. However, suspending deductions in this way for a set period of time, whilst mitigating the initial impact, will not resolve the problem due to the very principle of debt still being accrued. Inevitably, claimants will have to pay back this debt at a later date.

April 2020