Source · Select Committees · Scottish Affairs Committee
Recommendation 21
21
Paragraph: 123
We recommend that the DWP consider alternative arrangements to the five week wait for a...
Recommendation
We recommend that the DWP consider alternative arrangements to the five week wait for a first payment and associated advances system (which currently acts as an interest free loan) and should consider again the recommendation from the Work and Pensions Select Committee of implementing a ‘starter payment’ to a claimant two weeks after their initial claim. This change would assist claimants in climbing their way out of poverty and address the issues that have affected claimants as a result of the five week wait and associated advance payment system on Universal Credit.
Paragraph Reference:
123
Government Response
Not Addressed
HM Government
Not Addressed
New Claim Advances are the claimant’s benefit paid early, allowing claimants to access up to 100% of their estimated Universal Credit payment upfront. With a Universal Credit Advance, claimants receive an additional Universal Credit payment, which now can result in 25 payments over 2 years, rather than 24. This extension to spreading payments over 2 years was for New Claim Advances or Benefit Transfer Advances issued from 12 April 2021. Advances issued before 12 April 2021, do not have their maximum repayment period extended as claimants agreed to having their 13 UC payments spread across up to 12 months. The introduction of non-repayable advances would increase fraud risk in the benefit system, as well as imposing the administrative burden of extra verification checks. Additionally, people with sufficient earnings or income with little or no entitlement to Universal Credit, could inappropriately gain, by speculatively claiming in order to obtain a non-repayable sum upfront. Furthermore, DWP estimates the costs of non- repayable grants to be between £2.2 and £2.8 billion.