The Chancellor just told anyone struggling under Universal Credit to take out a loan [VIDEO]

Philip Hammond's unemployment gaffe
Steve Topple

Chancellor Philip Hammond has advised anyone struggling financially under the government’s Universal Credit (UC) scheme to take out a “loan” to “tide them over”. But when asked to explain his comment, Hammond fell apart, live on the BBC.

Stick a pony in me pocket

Hammond was appearing on BBC Breakfast, discussing the Conservative Party conference. But when host Dan Walker asked the Chancellor if he was “happy” with how UC was “working”, he admitted [0:32]:

I think the design of Universal Credit is right. We recognise that there is a challenge around the waiting time, and the sort of cash flow management people have during that waiting time…

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He then went on to say [0:45] that the Work and Pensions Secretary David Gauke was telling job centres to:

Point people… to the loan arrangements that are available to them.

I’ll fetch the suitcase from the van

The loans Hammond refers to are known as ‘short term advances’. They are available from the Department for Work and Pensions (DWP), and a Freedom of Information (FOI) request showed [pdf] they can take up to 72 hours to be paid. But as Hammond indicated, they have to be paid back, and are automatically deducted from a claimant’s UC payments.

But as Walker pointed out [1:19] to Hammond in the BBC interview, people still end up with “less money to pay for the things they need to pay for”. And the Chancellor couldn’t give the host a coherent response to this, saying [1:33] regarding the repayment of the loan:

It… it can be spread over time.

‘Cos if you want the best ones

He then claimed [1:45] that UC “smooth[ed] the cliff edges” from benefits to work, and that [2:06] the loans “are an important part of that”:

But many politicians, including some from his own party, disagree with Hammond.

But you don’t ask questions

As The Telegraph reported [paywall], 12 Conservative MPs have written to Gauke, urging him to pause the rollout of UC. They are led by Heidi Allen MP, who believes, as The Telegraph reported [paywall], that Gauke is “listening” to concerns about UC:

I know he’s looking closely at it whether he wants to push that button on accelerating the rollout.

Opposition to UC from Labour has been intense because, as The Canary has documented, it has been plagued by problems since it was introduced. 31 Labour MPs have been campaigning to stop the UC rollout. The MPs cited that, in other areas where it had been rolled out, people had to “wait seven weeks for payment of the benefits”; which put an “incredible strain” on them. And an investigation by The Guardian in February backs up their assertions. It found that:

  • Families unable to manage the regulation 42-day wait for a first payment are regularly referred to food banks.
  • Some claimants are waiting as long as 60 days for an initial payment because of processing delays.

Then brother, I’m your man!

Most recently, both the Trussell Trust and Citizens Advice have called for the UC rollout to be stopped. But the DWP told The Canary that UC is “working”:

UC provides additional, tailored support to help people move into work and stop claiming benefits altogether. And it’s working. With UC, people are moving into work faster and staying in work longer than under the old system.

It is already in every jobcentre for single claimants, and we are rolling it out to a wider range of people in a safe and controlled way. The vast majority of claimants are paid in full and on time, and are comfortable managing their money. Advance payments and budgeting support is available for anyone who needs extra help.

And at a fringe event of the Conservative conference on Sunday 1 October, Gauke indicated that the rollout of UC would continue as planned. This was confirmed on 2 October by a statement on the government website, noting that UC will be “introduce[d]… to a further 45 jobcentres across the country”.

But here’s the one that’s driving me berserk

Labour has hit back at both Hammond and Gauke’s comments. Shadow Work and Pensions Secretary Debbie Abrahams said:

It is an insult to those being pushed into debt and rent arrears by this Government’s punitive six week wait policy that the Work and Pensions Secretary is suggesting they get another loan to make ends meet. [He] could and should immediately end the misery caused by the six week wait for payment of UC.

Why does Universal Credit not work?

The DWP and the Tories seem to believe that it is acceptable that many people are facing financial hardship due to UC. Research from Citizens Advice shows that 39% of people have to wait more than six weeks to get their first payment. And it also showed that 57% of people are borrowing money to tide them over. This unacceptable shambles is severely impacting those who can least afford it. UC needs to be stopped. And it needs to be stopped now.

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