Source · Select Committees · Scottish Affairs Committee
Recommendation 120
120
The advance payment system was commented on critically by our witnesses.
Conclusion
The advance payment system was commented on critically by our witnesses. Kirsty McKechnie of the Child Poverty Action Group said that advances ‘contribute to the ongoing hardship that people experience on Universal Credit and the difficulty in making ends meet from one end of the month to the next.’303 Nina Ballantyne from Citizens Advice Scotland highlighted how an advance ‘functions like a loan, so even if people do take it out what they are left with is a much lower payment for the months thereafter, meaning what was already a subsistence payment is that much harder to cover things with additional money taken off it.’304 The Trussell Trust said that whilst advances were designed to mitigate against the challenge of the five week wait they have also ‘turned an immediate shock of hardship into a prolonged lower level of income [which has] equally dramatic effects on people’s ability to afford essentials.’305 Money Advice Moray argued that: ‘Claimants should not be penalised for having to take out advances because of the 5 week wait imposed on them.’306 On this issue Citizens Advice Scotland stated simply that: ‘Placing people into a cycle of debt should not be a tenet of the Universal Credit system.’307
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.