The Department for Work and Pensions (DWP) boss just made some jaw-dropping comments about Universal Credit. She made them when a local media outlet caught her visiting a Jobcentre. And her claims about the benefit show the desperate spin the DWP is trying to put on it.
DWP: loan sharks without the interest?
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. But as Policy in Practice noted, these advances are often pushing already struggling people into debt. Recently, advances have been hitting the headlines. MPs have been pushing the DWP over the issue. And now, the Liverpool Echo has caught DWP secretary of state Thérèse Coffey trying to whitewash the chaos the advances are causing.
People are getting advance payments, instead of getting 12 monthly payments, they can get 13.
The elements of getting 13 payments over a year instead of 12, we are looking to extend it to a 16 month advance.
That’s the sort of principle to help get people into a monthly salary like yourself.
This incredible spin from Coffey just whitewashes the truth about Universal Credit advance payments. Because it may be factually correct that the DWP is giving people 13 payments instead of 12. But it is certainly not ‘helping’ people at all. And Coffey fails to mention that 12 of the 13 payments will actually end up being less because of the advance.
In November 2019, 1,307,000 people were paying back advances or having deductions from their Universal Credit payments.
Also, between February and November 2019, the percentage of all Universal Credit claimants paying back more than 20% of their standard allowance towards advances or in deductions rose from 29% to 32.3%.
And the financial scale of advances is huge. As the Mirror reported, the DWP got £50m in one month from claimants paying back advances. Moreover, as of May 2019, the value of DWP advances had rocketed by 28.9% in just three months.
Also, as The Canary exclusively revealed, there has been a 35% increase since June 2017 in the percentage of new claimants having to have advances. But it took The Canary doing the maths to find this figure out. This is because the DWP does not publish precise or regular data on advance payments. And with the growing storm surrounding advances and the five-week wait for a first payment, it’s easy to see why it might want to bury the stats.
Pushing families into debt
As Disability Rights UK reported, the charities StepChange Debt UK and the Trussell Trust did a report into benefit payment reductions. They found that deductions from people’s payments, including advances:
are hugely significant for people on low incomes… A deduction of just 5% would push nearly half of StepChange clients on benefits into a negative budget situation, meaning they wouldn’t have enough money to cover essential costs.
Previous research among StepChange clients who had money taken from benefits to repay debt showed 71% saying it caused them hardship and a quarter had cut back on food spending.
Because repayments for advances don’t consider people’s ability to afford them, they will inevitably have a similar impact.
Yet the DWP still continues to dish out advances instead of resolving the five-week wait. It seems ludicrous that the DWP is pushing already vulnerable claimants into debt. And it’s even more ludicrous that its boss thinks she can spin the issue away. But given the department’s ‘fingers in its ears’ approach to Universal Credit, it’s wholly unsurprising.
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