More work to do on Credit issues

People are struggling to make ends meet as they wait for Universal Credit payments.
People are struggling to make ends meet as they wait for Universal Credit payments.

Universal Credit is a benefit that will affect around 37,000 households in Northumberland.

Over the last few months, Citizens Advice Northumberland has been writing to our MPs, sharing our concerns.

Many people are struggling to make ends meet while claiming Universal Credit because of problems with the system, and people are getting into debt while they wait for a payment.

The Government seems to be in listening mode. It has recently made some significant changes. All claimants will now be told about Advance Payments and the helpline will be free.

But while this is very welcome, there is still more to do.

Citizens Advice calls on the Government to address some of the complex challenges.

• Reduce the ‘built-in’ wait for first payment.

The decision to design Universal Credit around a monthly payment in arrears meant that navigating the start of a new claim was always going to be difficult.

People often claim after significant life change, like having work hours cut, separation or illness, but they have to wait over a month for a payment to cover their immediate outgoings, including rent.

This was made worse when ‘waiting days’ were designed in, then extended to seven days, which means many people aren’t eligible for Universal Credit for the first week of their claim. This, along with up to seven processing days, has led to a six-week wait.

People’s rent and bills don’t stop while they wait for a payment. The need to put food on the table doesn’t go away. Many don’t have savings to tide them over. Half of the people we help with Universal Credit had to borrow money while waiting for their payment, while many others got behind on bills and rent payments.

Advance Payments provide some help, but come as a loan,  meaning future payments are reduced as they are paid back. More than half of claimants are getting one of these loans. It’s clear the majority cannot manage a six-week wait for payment.

The Government needs to reduce the wait while also addressing the challenge of people needing to pay rent in advance.

• Reduce the number of people who don’t get paid on time.

Currently one in five claimants aren’t paid on time, taking their wait beyond six weeks. In many cases this is because there are complications or confusion with a claim, which suggests there isn’t enough help available to navigate the process.

This can be partly solved by providing clear training and guidance to Jobcentre staff.

Universal Support  is delivered by local authorities and partners to help people transition to the new benefit. It’s inconsistently delivered and there’s limited funding. More resources are needed.

• Improvements to work incentives.

This was a central feature of Universal Credit when it was conceived, but some people, such as single parents, will be worse off. The Government recognised this by reducing the amount benefits are reduced by when you’re earning – the taper rate, but it hasn’t fully fixed the problem.

The Government should invest in work allowances to ensure people keep more of their earnings, or it could reduce the taper rate.

Since Universal Credit was designed eight years ago, society has changed, as has the labour market and technology to build digital systems like those used to run Universal Credit.

New challenges need to be tackled as the reform rolls out. The government must continue to listen, and be ready to adapt the system where necessary so it works for everyone.

For people experiencing difficulties with Universal Credit, help is available from Citizens Advice on 03444 111444, 01670 339960 or text DEBT to 81400.