Waiting for five weeks until claimants receive payment results in insufficient money to cover basic needs, such as food/heating creating a reliance on food banks and other charitable sources.
In a considerable number of cases, the wait is longer than five weeks; this can be due to error or delay in claiming, and there are very limited backdating options.
Tenants are reluctant to change over to UC as they do not have financial resources to wait for the UC money, and so feel they will be financially worse off if they move onto UC. Additionally, tenants are uncertain of how much benefit is going to be received and how much will be paid towards their housing cost. Claimants are unable to apply for help towards rates until UC has been assessed.
Housing associations have noticed that this wait presents difficulties for single parent households where childcare costs are covered by Child Tax credit for up to 70% of invoices. Although UC can pay up to 80% of the eligible costs it can only be based on monthly childcare invoices. This is proving to be a major disruption to the childcare payment arrangements for the potential UC claimants.
During this five week period, tenants commonly need to rely on support from charitable organisations, such as St Vincent de Paul, or borrow from family members. Some housing associations have supported additional services such as the ‘Social Supermarket’ and food club to meet a growing need. This can be both unsustainable and stressful for them. Tenants can become anxious owing to the accumulation of rent arrears. Housing teams report that they can see tenants’ mental health suffering during this difficult five week period often compounded by an inability to maintain their new UC electronic journal, attending new work coach appointments etc.
This wait remains a major obstacle for many people who are deciding whether or not to lodge a claim for UC. It is particularly difficult for the families that have been used to budgeting their livelihoods on a fortnightly basis.
The more vulnerable tenants struggle with the changeover to UC and need significant guidance. If UC payments were made every two weeks, as per the old benefit system this would aid tenants adapting to the change and manage their money more effectively.
Many claimants do not want to apply for the advance payments as the repayment deductions taken from their award results in them having insufficient money to subsist on for a longer period.
If an advance is sought but the claimant is unable to repay at the rate set- the advance will be refused. A greater uptake might be achieved if this rate was lowered or negotiable.
Maximum repayment timeframe is 12 months; by extending this time frame it would prevent hardship for the claimant, helping to alleviate poverty in the first year of claim. A loan makes it difficult for claimants to manage in the longer term.
If an advance payment is refused there is no right of appeal, with the next step being a judicial review. Lack of appeal rights could cause additional hardship if the claimant is prevented from accessing advance payment within the five week period.
Removing the five week wait means the tenant would have no need to apply for an advance payment. They would not receive housing costs directly, and rent arrears would not occur for housing costs being paid direct to tenant.
This advanced payment helps the claimants in the short term, but creates further debt, which increases a claimant’s future debt and thereby punishes those who have the least in our society. If funds were issued on a weekly (maximum fortnightly) basis, it would allow people to manage and budget their finances better. It should be recommended to take as little of an advance amount as possible given the long-term repayments impact.
Previously tenants have not paid rent but instead had the housing payment paid direct to landlord. UC payment that includes housing costs has been a source of confusion, as tenants might assume the payment represented all of their benefit entitlement (excluding housing costs) due to the length of time waiting for payment. As a direct consequence, rent arrears began/accrued further.
The advance payment for vulnerable tenants can be problematic. People with drug and alcohol issues struggle to manage lump sum payments, and there is an increased risk that they could be manipulated. Victims of economic abuse could have the lump sum taken off them.
Tenants should also be made more aware of the Universal Credit Contingency Fund (a non-repayable grant)- this is preferable to a repayable loan.
Faster claims processing, and consideration of a UC start-up grant would be favourable rather than advanced payments, especially for the most vulnerable tenants or those who have trouble in financial management.
If the five week period is not stopped, and the advance still has to be paid back over a 12 month period, perhaps the Department could issue the funds over that five week period in a weekly or fortnightly instalment.
In a number of cases, claimants will get into further debt during this period with loans/credit cards etc. If they have received an advance it is deducted from their UC payments until repaid in full. This means that income remains critically low and there is the potential for claimants to resort to borrowing from high interest lenders such as ‘loan sharks’, worsening their overall financial situation. Some tenants also reported having to resort to credit cards.
Housing arrears accrued during this timeframe create a detrimental impact if the tenant has a history of arrears.
Claimants have not been made aware of the grant. Where claimants have been able to access the grant from the UC contingency fund, it has helped mitigate the five week wait. The UC contingency fund in NI can be difficult to access. Lengthy waits on the phone and the questions asked during the claim are very intrusive and difficult for claimants when they are most vulnerable. DfC have now made an online application available for Discretionary Support for living expenses, but many claimants would be unable to complete or not have internet access.
The best way to offset the impact of the five-week wait is to provide support to tenants going through the ‘natural migration’ process.
The Department could consider the following options:
It would be beneficial for all claimants if the Department could eliminate the five-week wait for the first payment and consider a shorter assessment period. This would allow tenants to receive payments as soon as possible, therefore doing away with the need for an advanced payment. This would make it easier to backdate claims as a result of delay/errors due to reasonable circumstances.
It would be difficult to ascertain the full cost or savings associated with this as so much of the impact for families and communities is not measured or measurable. A questionnaire could be conducted based upon a sample of claimants by NIHE and HA staff for tenants who are UC claimants and the data would be returned centrally to the Department.
From this data it might be possible to produce a projected figure of the cost.
A questionnaire could collect information on the nature of the additional support (financial and otherwise) that new claimants for UC required from third parties. This includes charities, floating support, and staff from housing associations. The questionnaire could also be linked to a customer journey map which would easily identify the additional support that was required.
Savings could be made in relation to other statutory or voluntary bodies, who need to step in to protect those struggling during that five week period; for example, organisations such as St Vincent de Paul cannot keep up with the demand for financial help. Low-income claimants are now accessing charitable help with day-to-day expenses rather than just in emergency situations.
Some clients could be fast tracked if ID, conditions of application & claimant commitment are met.
All claimants should be treated equally with regards to the mitigating options, but more support should be in place for the vulnerable using the UC system, and navigating the new electronic approach to their UC claim for benefits.
The information gathered by the Department on the claimant’s income and circumstances could be used to assess for vulnerabilities and grants and further assistance offered:
If a claimant were transferring from income-based legacy benefits, the five-week wait could be dropped. Identity and fraud prevention, as well as having most of the information required, should mean these clients could be paid quicker, as the client’s circumstances will likely be the same. They could be paid quicker with little risk of overpayment- this would also negate the need for an advance payment.
People identified mental health problems/ vulnerable people in immediate need could be offered interim payments or a grant that does not have to be paid back. The contingency fund money could be used for this.
To help families with children, Child Tax credit should ‘run on’ for two weeks after claiming Universal Credit.
The most vulnerable should receive UC start-grant that is not repayable. This group would include those exiting hostels for the homeless / woman and children at risk of domestic violence etc. The grant would also assist the long term unemployed / those that carry no savings
The barriers would be the cost and the need for retraining staff to provide support in the claiming of grant money from the UC contingency fund.
The UC system was designed for a five week wait specifically to assess those claimants that are working- the assessment of their earnings over this period may not be so easily adjusted.
Increased applications may be difficult to deal with. However, it is still going to replace the legacy system by 2023. The new claims process would need to be thoroughly mapped, with bottlenecks and unnecessary processes or delays identified. Trials aimed at reducing the process would need to be put in place. Despite the ongoing momentum for digitalised services, perhaps some consideration should be given for cases that can have a paper-based UC claim form submitted by those who lack access to the necessary IT resources/skills to apply online.
Removal of the five week wait may be beneficial, as payments would be made in real-time with reduced danger of overpayments and clawbacks. The main risk of overpayment is if the client’s income rises substantially or circumstances change.
Consideration to be given on different options for vulnerable tenants.
April 2020