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Universal Credit: Debts

Question for Department for Work and Pensions

UIN 8324, tabled on 27 January 2020

To ask the Secretary of State for Work and Pensions, what assessment her Department has made of the effect of the five-week wait for a first payment of universal credit on levels of indebtedness.

Answered on

30 January 2020

No one has to wait five weeks for their first payment of Universal Credit. New claim advances are available to support those in financial need until their first payment is made. The Department has learnt from where we did not get things right in the past in the legacy benefit system. Too often, the desire to pay quickly meant claimants not receiving their correct entitlement as we did not have an appropriate timeframe to review household circumstances.

Claimants can access up to 100% of the total expected monthly award, which they can pay back over a period of up to 12 months. We have announced that from October 2021, the repayment period for these advances will be extended further, to 16 months. Proposed repayments of the advance are explained, and all claimants are advised to request a level of advance which is manageable both now and when considering the repayments required.

Our Work Coaches gauge claimants’ financial needs from their first interview. For those who need help with budgeting, we are able to signpost additional support, for example through the Money and Pensions Service (MaPS), who can help with personal budgeting and money management through its free helpline, printed guides and digital guidance.

Alternative Payment Arrangements (APAs), such as a managed payment to landlord (MPTL), are available to enable the housing costs element to be paid directly to the landlord if the tenant is likely to have difficulty in managing their rent payments or is in rent arrears. APAs will only be considered where a lack of financial capability poses a risk to the claimant, or their family, and the decision to implement one is assessed on a case by case basis.

Our own analysis shows that Universal Credit in fact reduces rent arrears, supporting research carried out by the National Federation of ALMOs which shows over three quarters of their tenants come onto Universal Credit with pre-existing rent arrears. It also shows that arrears tend to increase prior to making a claim for Universal Credit, and that Universal Credit actually appears to be helping to clear arrears over time. We are currently extending this analysis to include a number of housing providers. It will be published when completed.

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