The DWP’s latest Universal Credit revelations are mind-blowing

DWP and Universal Credit logos against a fireball

The Department for Work and Pensions (DWP) has revealed more eye-watering figures around Universal Credit and the coronavirus (Covid-19) pandemic. But delve deeper into this latest revelation, and it actually poses more questions than it gives answers. Moreover, the department buried the stats in a spreadsheet. So the public may not have even been aware of them.

DWP: coronavirus chaos

There has been growing controversy over the DWP’s handling of welfare payments during the pandemic. From chaos surrounding the ID verification process, to the built-in five-week wait for a first payment, the department has faced criticism from MPs and charities alike. And now, fresh figures have shown the scale of the crisis that’s building due to coronavirus. And the stats come in the form of the number of people needing advance payments.

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

Advances

There are four types of advances the DWP gives to claimants. These are:

  • “New claim” advances, while people wait for their first payment.
  • “Benefit transfer” advances. These are for people moving off old benefits like Employment and Support Allowance (ESA) onto Universal Credit.
  • “Change of circumstance” advances. These are for people whose Universal Credit payments increase, possibly due to sickness or disability, but who need the extra money there and then.
  • “Budgeting” advances. For these, claimants have to have been on Universal Credit for six months. They are to help with unexpected costs.

Repayments for the advances are spread out over 12 months. As Policy in Practice noted, these advances are often pushing already struggling people into debt. On Tuesday 21 April, the DWP released the figures for how many advances it gave out between 1 March and 12 April. The numbers are mind-blowing.

Read on...

Mind-blowing figures

During this period, the DWP gave out 606,200 advances of all types. Drilling down into the data, and 91,430 were budgeting advances. 20,140 were change of circumstance ones. But a massive 494,620 of these were new claim or benefit transfer advances. When compared to the number of new Universal Credit claims (households) during the same period, this represents 32.6% of the 1,513,310 of them having to ask for a new claim or benefit transfer advance. Here’s where the picture becomes slightly unclear.

Between December 2018 and November 2019, the DWP gave out 1,996,000 advances. Because the DWP does not provide in-depth data, The Canary had to calculate what percentage of new claims during this period had to ask for a new claim advance. And it was around 65%. So the latest figures for 1 March – 12 April appear to show a decline in the number of new claimants needing advances.

But the devil is in the detail. Because the DWP’s figures don’t give the full story.

Not all as it seems?

Firstly, the 1,513,310 figure of new claimants is not the number of claims that have been approved. As the DWP notes declarations are:

When an individual/household provides information on their personal circumstances to begin a UC [Universal Credit] claim. Not all declarations will go on to receiving a payment.

Secondly, official coronavirus “lockdown” began on 23 March. From then until 12 April, there were 1,104,950 new claims for Universal Credit [ED: table 1, row 15 column y on the xls]. Also during the same period, there were 395,430 new payment or benefit transfer advances.

Thirdly, the DWP has to approve people’s claims before they can get an advance. So, the 494,620 figure may still not be the true extent of the number of new claim advances during lockdown.

But what we can say is that in the space of 43 days, the DWP had already given out 30% of the total advances it gave in the whole year between December 2018 and November 2019. So, in a few weeks from now the number of advance repayments people owe to the DWP could be huge. And it could potentially be a ticking time bomb for millions of people.

The ticking time bomb

As The Canary has been documenting, many new Universal Credit claimants will be self-employed people whose work has dried up. Some of these will already have been financially precarious. Now, the five-week wait for a first Universal Credit payment could leave them with no money. Therefore, they may well apply for an advance. But, as chair of the work and pensions select committee Stephen Timms pointed out, advances are actually just “loans” people have to pay back to the DWP. So, in the words of the Salvation Army, the DWP could be creating a “coronavirus debt crisis”. It said the government should be giving people grants, not loans.

The full picture of just how many people have had to claim Universal Credit during this crisis will not yet be known. Nor will the number of people who have had to beg the DWP for advances. But given these new figures represent a rocketing in the numbers, the situation is looking worse and worse by the day.

Featured image via pixabay – geraltWikimedia – UK Government / Wikimedia – UK Government

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