Source · Select Committees · Work and Pensions Committee
Recommendation 12
12
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The evidence we received was overwhelmingly in favour of some form of initial, non-repayable payment...
Conclusion
The evidence we received was overwhelmingly in favour of some form of initial, non-repayable payment for new Universal Credit claimants. That would give new claimants the money they need for basic living essentials like food and heating, without requiring them to repay a debt to the Department from their future Universal Credit payments. We agree that new claimants should receive a form of Universal Credit: the wait for a first payment 79 “starter payment” when they first apply for Universal Credit. But we heard a wide range of proposals for how such payments should work and the level at which they should be set.
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66
Government Response
Acknowledged
HM Government
Acknowledged
DWP works with HM Treasury to address any technical barriers in order to ensure that Advances are included in the scheme from its launch, so that UC claimants can benefit from the support it offers straight away. The Department is supportive of Breathing Space and we fully recognise the need to ensure people and families with problem debt can access debt advice and identify appropriate debt solutions. To help people in problem debt get their finances back on track, the budget for free debt advice in England has been increased to over £100 million this financial year. From May 2021 the Breathing Space scheme will offer people in problem debt a pause of up to 60 days on most enforcement action, interest, fees and charges. For all benefit overpayments (including overpayments of UC), Short Term Benefit Advances in legacy benefits and Third Party Deductions in legacy benefits, it remains our intention to implement the scheme to meet our obligations from May 2021. UC Advances and Third Party Deductions in UC (for debts we manage of behalf of others) will come into the scope of the scheme once implementation of UC is complete this is due to the complexities of system development, which must be scheduled alongside other important measures. Any claimant in unexpected hardship can already request their New Claim Advance or Change of Circumstances Advance be deferred for three months and this has been the case for many years. For Budgeting Advances, this deferral can be for up to six months in cases of unexpected hardship. We have already set out that advances are not loans, the consequence being no enforcement action, interest, fees or charges would be applied to any UC claimant in any case. Recommendations 13 and 14 We recommend that anyone claiming an Advance should be given the option, at the outset, of having the housing element of the Advance paid directly to their landlord. This would ensure that claimants’ housing costs are covered during the wait for their first payment, and that they will not face the risk of falling into arrears or eviction as a result. We recommend that vulnerable claimants or claimants with specific needs are prioritised for having the housing element of their Advance paid directly to their landlord. This could include people with learning disabilities, people with mental illness, people who have previously been homeless, or people with drug or alcohol addiction. The committee should recognise that the housing element of a UC payment may not cover all the cost of the rent incurred. Managed Payments to Landlords (MPtL) are already available on request to any claimant from the start of, or during their claim. Such arrangements can also be requested by the landlord or DWP staff, where it is clear such an arrangement is necessary or would be beneficial. As such, the Department believes that sufficient provision is already in place to achieve the outcomes the Committee has suggested. We have worked to facilitate such arrangements through the new Apply for a Direct Rent Payment site, a new online service which can be utilised by landlords to enable the direct payment of a claimants’ rent in UC. This replaced a previously time-intensive clerical process and enables direct payments, where appropriate, to be implemented more easily. The Department also works closely with social landlords to improve their understanding of UC processes and encourage monthly tenancies as standard. UC promotes personal responsibility and expects the majority of tenants to manage their finances, including their own housing costs, whether they are in or out of work. But, for those tenants for whom the UC payment structures represent a significant challenge, the Department provides specialist support for personal budgeting, money guidance and debt advice, including through the Money and Pensions Service. Diversion of the housing element of Advances could result in landlords pressuring vulnerable claimants to request a larger Advance than is necessary to cover their financial needs. Claimants, or the landlord if a MPtL is in place, will receive housing costs support at the end of the first assessment period and monthly thereafter. As we have mentioned earlier in our response, our priority is to ensure APAs are considered and implemented on a case by case basis, which allows Work Coaches or Case Managers to consider and respond to the specific financial needs of individual claimants. We have taken a number of actions to improve learning for Jobcentre colleagues to enable them to proactively identify, support and signpost customers with complex needs. We continue to ensure learning and development opportunities are refreshed and expanded frequently. For example, the ‘complex needs’ module within Universal Credit Work Coach learning (addressing claimants with particular challenges in accessing the service, moving towards work, and financial independence) is continually updated.