Source · Select Committees · Scottish Affairs Committee
Recommendation 121
121
Our colleagues on the Work and Pensions Select Committee recently held an inquiry entitled Universal...
Conclusion
Our colleagues on the Work and Pensions Select Committee recently held an inquiry entitled Universal Credit: the wait for a first payment. They recommended the DWP should: pay all first time claimants of Universal Credit a “starter payment” equivalent to three weeks of the Standard Allowance of Universal Credit. This payment should be made two weeks after the initial claim, and only once the claimant’s identity has been verified, to mitigate the risk of fraud.308 The Work and Pensions Committee said that it had received evidence in its inquiry that was overwhelmingly in favour of an initial non-repayable payment for new Universal Credit claimants. The Committee argued this “starter payment” would ensure claimants would have the money needed for basic living essentials like food and heating.309 The DWP responded to this recommendation saying that the advance payment system already in place means that money is ‘available urgently to claimants if they are in need of financial help’ and that the introduction of non-repayable starter payments would increase fraud risk in the welfare system.310
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.