Thank you for contacting me about Universal Credit (UC) and financial hardship.
UC is the biggest and most fundamental reform to the welfare state since its creation. It is a modern benefit based on the sound principles that work should always pay and those who need support receive it. It is also fair to taxpayers.
In 2010, the welfare bill cost each household £8,350. This was an increase of nearly £3,000 per household since 1997. Not only was this system failing to reward work, but it was the taxpayer bearing the burden.
I firmly believe that UC is a fair benefit that protects vulnerable claimants and ensures that work always pays. As UC is a simpler, more accurate benefit based on up-to-date information, it will provide people with their full entitlement. This means that 700,000 people will receive on average an extra £285 per month which they have not received under the existing system. Around a million disabled claimants will gain on average £100 a month through UC, because their award is higher through UC than legacy benefits.
UC will help 200,000 more people into work when fully rolled out, and empower people to work an extra 113 million hours a year. You might be interested to know that people on UC spend around 50 per cent more time looking for a job than they did under Jobseeker's Allowance. Since 2010, we have seen over 3.3 million people move into work, which is on average 1,000 people each and every day. And youth unemployment has fallen by almost 50 per cent.
In this year's budget, the Chancellor announced a £4.5 billion package for UC, which will make a real difference to the lives of claimants across the country. An extra £1.7 billion a year will be put into work allowances, increasing the amount that hardworking families can earn by £1,000 before their award is tapered away, providing extra support for 2.4 million working families.
This is on top of a £1 billion package of changes, providing two additional weeks of legacy benefits for those moved onto UC, a twelve-month grace period before the Minimum Income Floor is applied, and a reduction of the normal maximum rate at which debts are deducted from UC awards, from 40 per cent to 30 per cent of Standard Allowances.
Rightly for a programme of this scale, the priority continues to be its safe and secure delivery and I am committed to having a strong safety net where people need it.
There are many reasons why people use food banks. That is why the Department for Work and Pensions has committed to a test and learn approach to delivering UC and has made improvements where necessary, such as through removing seven waiting days and introducing 100 per cent advances.
All UC claimants are subject to an initial assessment period, regardless of the circumstances that have led to a claim. Assessment periods allow for UC awards to be adjusted on a monthly basis, ensuring that if a claimant’s income falls, they do not have to wait several months for a rise in their UC award.
As of August 2018, 84% of paid UC full service new claims were paid in full on time. When new claims are not paid on time, it is estimated that two-thirds have an outstanding verification issue, such as providing bank statements, evidence of childcare costs, or proof of rent.
I am glad that UC has been designed with accessibility in mind. Where a claimant requires assistance to complete the initial application process, support is available via the Universal Credit helpline, face to face in the Jobcentre or in exceptional circumstances through a home visit. If a claimant needs more intensive or specific support to make their claim, face-to-face and other help is available through the Universal Support Assisted Digital Service.
I also welcome advance payments which are worth up to 100% of someone’s indicative award and are available from the date of their claim. Around 60% of eligible new claims to UC received an advance in October 2018. This shows that people are being made aware of advances and are getting help when they need it. I would add that if a claimant is in financial difficulty as a result of the level of deductions being made, they can request that a reduction be considered.
Claimants may also be entitled to a two week Universal Credit Transitional Housing Payment. Claimants on the income-related elements of Jobseeker’s Allowance and Employment and Support Allowance, and Income Support will also receive an additional payment providing a fortnight’s worth of support during their transition to UC. This will be effective from July 2020, and benefit around 1.1 million claimants.
Personal Budgeting Support (PBS) is also offered to UC claimants from the outset of their claim. PBS helps claimants as they transition to UC and adapt to the financial changes that UC brings. PBS can be online, telephone or face to face support. Face to face support is currently delivered through local authorities via Universal Support.
I do realise that, despite this action, some people can fall into problem debt. That is why I support the implementation of the Breathing Space Scheme – a 60 day period of protection for people in problem debt, to engage with debt advice and find a sustainable, long-lasting plan to solve their debt problems.
I hope this helps to clarify the support available to people claiming UC when they struggle with financial difficulty.
However, having visited the local Job Centre and closely monitored local agencies, I am pleased that there are no signs that UC is causing a large number problems for claimants in this area. The constituency has already seen the introduction of Universal Credit and out of 65,000 constituents, less than half a dozen have contacted me with problems with the system, the vast majority of which I have managed to assist and resolve on their behalf. I will continue to follow the development of the UC system very closely to ensure that people move smoothly into the new system, and I will support improvements when necessary.
If you are personally aware of anyone who is experiencing difficulties with UC, please encourage them to contact my office and I will do everything I can to support them.
Thank you again for taking the time to contact me.