Policy in Practice recently hosted an event at the House of Lords for frontline welfare policy practitioners to discuss ways to improve Universal Credit rollout, directly with the DWP.
Feedback from the event, together with analysis by Policy in Practice, was included in a briefing paper that was discussed with the ministerial team and senior DWP officials. They welcomed the issues raised and the constructive options put forward to resolve them, including reducing the six-week wait.
Responding to today’s Autumn Budget, Deven Ghelani said
“We would like sincerely thank everyone who contributed to the paper and gave constructive options to help deliver on the policy intent of Universal Credit.
“We welcome the removal of the seven-day waiting period for Universal Credit, with repayments of a more generous UC advance being spread across 12 months, as recommended in our briefing note. We believe that our recommendations improve the implementation of Universal Credit, and smooth its rollout as it accelerates across the UK.”
- Contact Deven Ghelani for comment on 07863 560677 or 0330 088 9242
- Download the Briefing paper: Options to reduce the six-week wait
- Download the Briefing paper: Additional options to improve Universal Credit
Universal Credit will support seven million households
The briefing paper offers a range of suggestions that would ease the transition for the seven million households who will be receiving Universal Credit in the coming years.
Practitioners are particularly concerned about the challenges faced by people during the initial waiting period for new customers moving onto Universal Credit, the ‘six-week wait’.
The perception is that too much is being asked of the most vulnerable households in the UK, by emphasising employment over social security, and by asking them to wait several weeks for their first payment.
Universal Credit includes many people not expected to work at all, who don’t have final salaries or savings to rely on. Payment in arrears brings into the social security system some of the financial uncertainty that people currently face when moving into work.
£1bn savings made each of week of the 6 week wait
The Treasury makes a significant one-off saving of £5.2bn, or £1bn for each week of the six-week wait. These savings shift the burden of austerity directly onto the UK’s lowest earning households, and jeopardise a long-term reform in order to make a short-term capital saving. Universal Credit is intended to stand the test of time, a long-term reform that delivers significant and ongoing revenue savings by creating a system that provides social security, while removing the insecurity that many face when moving into work.
The range of options in the briefing note show that the six-week wait is not a necessary part of Universal Credit. Each option takes into account the policy intent of Universal Credit, to minimise barriers to work and promote independence, alongside the current policy issue of making payments quickly while considering the costs and administrative changes required.
Options to reduce the 6 week wait
We compared the standard Universal Credit claim, alongside the current option available to UC claimants, the Universal Credit Advance. We identified three additional options that we believe are deliverable, do not require a pause in Universal Credit, and are affordable because they incur only a one-off working capital cost, spread across the rollout of Universal Credit.
The first additional option meant using an earlier assessment period to calculate the UC award, moving the assessment period back two weeks meant that the DWP would be able to pay Universal Credit three weeks after a claim was made.
The second additional option involved an interim payment, based on 50% of the expected Universal Credit award being made at two weeks (or mid-monthly) and being balanced out at the end of the month, with this payment flexibility continuing to give claimants the option of twice-monthly payments.
The final additional option we considered was the removal of waiting days, removing the first seven days where two-thirds of current claimants are not eligible for Universal Credit.
Advance payments don’t fully resolve underlying problems
The recent reforms to Advance payment do not appear to have turned the tide toward a fundamentally positive and a well-intentioned reform. Universal Credit advance payments were introduced and enhanced because they mean a fast payment, at a low cost, however, the need for advances at scale suggests that there is an underlying problem, and the requirement to pay back the award means that many more will start their claim in debt.
Taking these and all other factors into account, Policy in Practice provided options to the DWP that would enable them to make the first payment within 21 days of the claim.
How to reduce the six-week wait to three-weeks
We believe payment within 21 days of the claim can be achieved by starting the first assessment period around 2 weeks, or 15 days, before the date of claim. This means that the first assessment period ends about two weeks after the date of claim and payment can be made up to 7 days after that.
This approach holds true to the original principles of Universal Credit, ensuring income from benefits mirrors income from work, while emphasising the social security element of Universal Credit that too many people currently believe is missing by paying people within three weeks after making a claim:
- It simply requires the dates of the first assessment period to be moved back two weeks.
- It means payments are made relatively quickly and in line with the current benefit system – Housing Benefit claims are currently paid within 21 days on average.
- It introduces a clear driver for claimants to verify claims quickly, improving assessment times.
- People leaving higher paid jobs with earnings to fall back on would not receive their first payment until month two. People on low or no earnings would receive either a partial or a full Universal Credit award within three weeks of making a claim.
- There would be a smooth transition for those transferring to Universal Credit from legacy benefits, minimising both the risk of overpayments and income gaps.
We believe that making Universal Credit payments within three weeks of the claim in this way is deliverable, affordable, keeps Universal Credit simple, and maintains and reinforces the original principles of Universal Credit. It was therefore the most deliverable option for DWP.
Alternatively, payment within 21 days can be achieved by making an interim payment after 2 to 3 weeks. This would be similar to an advance payment, i.e. based on an estimated 50% of Universal Credit entitlement. The balance of the first month’s entitlement would be paid at the end of the month so in effect this option introduces a twice-monthly payment frequency.
Both these options could be implemented alongside other suggestions, such as introducing payment flexibility and removing waiting days.
Other practical suggestions direct from the frontline
Alongside options to eliminate the six-week wait, frontline advis
ors made clear a number of operational issues with Universal Credit, together with a range of constructive suggestions to improve Universal Credit.
A selection of these include:
- allowing backdating of Universal Credit for one month prior to the start of the claim under any reasonable circumstances, with a provision to backdate to up to 3 months in the more limited circumstances outlined in the current regulations
- taking account of a changes in circumstances from the date they occur, to deliver savings alongside more accurate and fairer awards of benefit
- assessing income over a longer period for the self-employed before applying the minimum income floor, to ensure parity between employed and self-employed claimants
- setting the standard repayment period for an advance payment to 12 months, and clearly explaining deductions via claimant’s journals, to help claimants already in debt
- amending the DHP regulations so that they can be paid when there is good reason to believe that the housing element of Universal Credit will be paid in the near future
- outlawing the practice of placing restrictions on buy to let mortgages that discriminate against tenants in receipt of any type of benefits, including Universal Credit
- taking claimants in short-term temporary accommodation out of Universal Credit until their situation stabilises
- allowing a specific amount of time within the claimant commitment for the verification, and self-management of the claim, and for basic skills development
- allowing claimants to submit all claim verification online, and accepting photocopies as substitutes for originals wherever possible
- monitoring the earnings of claimants who come off Universal Credit, triggering an automatic Universal Credit payment if earnings fall
- the DWP recognising the value of local support by streamlining the consent needed by local organisations so that it is not so specific and time-limited
Thank you
Policy in Practice was founded to bring the experience of frontline practitioners into the heart of the policy development process. Universal Credit faces significant implementation challenges, and we wish to thank everyone who has contributed to the constructive suggestions included in the paper. Thanks also to the Joseph Rowntree Foundation for funding the analysis within the paper.
Harnessing your experience of putting policy into practice can lead to better experiences for people who need support.
- Contact Deven Ghelani for comment on 07863 560677 or 0330 088 9242
- Download the Briefing paper: Options to reduce the six-week wait
- Download the Briefing paper: Additional options to improve Universal Credit
