‘Simple steps could help cut the wait for Universal Credit payments’ – claim
REDUCING the time people have to wait for Universal Credit (UC) payments from six weeks would cost a “relatively low” £150-200m a year and Chancellor Philip Hammond should find the cash in his Budget, a think tank said.
The Resolution Foundation said the Government can take “simple steps” to cut the controversial waiting period which has been blamed for contributing to rising debt, rent arrears and evictions.
It comes amid reports that Mr Hammond could use next month’s Budget to cut the sixweek wait following an outcry from both Tory and opposition MPs as the flagship welfare reform’s roll-out gathers pace.
The think tank said UC needs urgent changes or it will not be fit for purpose, but stressed the overarching aim of consolidating six benefits into one is “a prize worth fighting for”.
The time taken for claimants to receive their first payment can be cut by a week and a half by scrapping the current seven-day “waiting period” and compressing payment processing days which are added to a one-month assessment period, the report said.
Ministers should also consider timing benefits payments more flexibly for different families, as new analysis of bank transaction data shows 58% of new claimants moving to UC after leaving employment in the last tax year were paid either fortnightly or weekly in their old job.
A “relaunch” of UC should also include faster payment of housing support and simplifying the process for claiming childcare support.
But there are also “major design flaws” which need to be tackled to improve the incentives for lone parents and second earners to work, the think tank said.
The Government should scrap tax cuts for the richest to pay for reversing cuts to UC which have made it £3bn a year less generous than the tax credits system it is replacing, leaving working families on average £625 a year worse off, the report said.
These cuts would hit working single parents particularly hard as they will lose an average of £1,350 a year with almost twice as many losing than gaining from the move to UC.
Incentives for claimants to work and increase their hours have also been “weakened” by the cuts and in particular risk being “undermined” for lone parents and second earners, the report said.
Single parents can now work far fewer hours before losing benefits which risks leaving them “trapped at low levels of pay”.
David Finch, senior policy analyst at the Resolution Foundation, said: “The upcoming Budget provides an opportunity to relaunch Universal Credit - making it fit for purpose in 21st-century Britain.”