The DWP just let slip two Universal Credit bombshells

The DWP logo in front of an explosion
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The Department for Work and Pensions (DWP) has just dropped yet more shocking figures about Universal Credit. It slipped the details out via a minister’s written answers. But the numbers were incomplete. So The Canary has done the calculations the DWP didn’t. These latest bombshells blow previous figures out of the water. Moreover, they show the dire situation nearly two million claimants are in.

DWP and claimants’ mounting debt

The DWP gives advances to new Universal Credit claimants while they wait for their first payment. This normally takes five weeks. As the DWP notes:

You can apply for an advance payment of your Universal Credit if you are in financial hardship while you wait for your first payment, for example, if you can’t afford to pay your rent or buy food.

You will need to pay back your advance a bit at a time from your future Universal Credit payments

Repayments for the advance are spread out over 12 months. As Policy in Practice noted, these advances are often pushing already struggling people into debt.

The previously reported figure for how many people were paying back advances or had deductions (excluding sanctions and fraud penalties) was 840,000 in February 2019. The deductions cover things like overpayments of other benefits and rent arrears. Meanwhile, in the same month the DWP gave out nearly £80m in advances.

When the DWP released this information in June 2019, MP Ruth George said that the number of people repaying advances may hit 1.5 million by June 2020. The latest figures may show it’s nearly at that point.

Read on...

Bombshell one

On 3 March, DWP parliamentary under-secretary Will Quince issued an update on these figures. We now know that, in November 2019, 1,307,000 claimants were paying back advances or having deductions. What’s more, the percentage of these people paying back more than 20% of their total standard Universal Credit allowance every month has also increased. The so-called standard allowance is the basic amount the DWP pays people. Money for children, sick and disabled people, and carers is on top on this.

In February 2019, 29% of all Universal Credit claimants were paying more than 20% of their standard allowance towards advances or in deductions.

Fast forward to November 2019, and this figure had increased to 32.3%. Now, while the top rate of an above-40% deduction from the standard allowance had fallen by 0.7%, this is still an overall increase. There’s no way of working out just how much money this is costing people. This is because the DWP does not hold data to that level of detail. But as of May 2019, the value of DWP advances had rocketed by 28.9% in just three months.

All of this is despite the government claiming it had already made some changes to make sure claimants paid back debt in a “sustainable and manageable way”. But this isn’t the end of the story.

Bombshell two

On 24 February, DWP parliamentary under-secretary Will Quince said that it gave 1,996,000 claimants an advance between December 2018 and November 2019. This is a huge number. Moreover, as a percentage of new claimants, it’s massive.

It’s hard to know just what percentage of Universal Credit claimants had advances. This is because the DWP does not release precise data about this. The latest data on what types of advances the DWP gave claimants is from June 2017. It showed that 77% of advances were either for new claims or people transferring from old benefits onto Universal Credit.

Let’s assume that new claims or people transferring from old benefits still make up 77% of all advances. So by The Canary‘s calculations, during those 12 months, just under 65% of new claimants had to ask the DWP for a first payment advance.

This is a 35% increase since June 2017.

Also, the financial scale of advances is huge. As the Mirror reported, the DWP got £50m in one month from claimants paying back advances.

The DWP says…

The Canary asked the DWP for comment. It directed us to Quince’s written answer, which said:

Around 60 per cent of new claims take up an advance. Subject to some fluctuation, this rate of advance take-up has been broadly consistent over the last 12 months. As the overall Universal Credit caseload grows, we expect the volume and value of advance payments to change in correlation. This shows that claimants are being made aware of advances and are using it where they need this help.

But this does not explain the leap in advances from 2017. This may be down to the fact that more working claimants are now moving on to Universal Credit from old style benefits and struggling with the changeover period. As the Joseph Rowntree Foundation thinktank said, 5.1 million people in working families would lose money under the benefit.

Yet despite all this, the DWP is refusing to shift on the advance payments policy.

Refusing to budge

On 12 February, SNP MP Angela Crawley asked the DWP if it:

will take steps to bring forward to date to extend the repayment period for universal credit advances to 16 months from October 2021.

Currently, the DWP is set to change the repayment period. From October 2021, claimants will be able to pay the DWP back over 16 months. In responding to Crawley, Quince said that:

There are no plans to introduce this earlier.

This ‘fingers-in-its-ears’ approach from the DWP has been consistent across the Universal Credit rollout. From rocketing rent arrears to sky-high foodbank use, the department is in perpetual denial. It even managed to spin more people needing to borrow money to survive as a sign of ‘increased awareness’. But perhaps most damning is the DWP’s lack of data on advances. None of what ministers have admitted to is available via the statistics website Stat-Xplore. So if MPs hadn’t asked questions in the first place, we’d never know. And still, it takes The Canary to put meat on the bones surrounding advances and debt.

The DWP’s wilful ignorance to the misery and suffering under the benefit is staggering.

Featured image via mikegi – pixabay and Wikimedia 

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