Yesterday, we published a report on how the people who use our services have been impacted by Universal Credit (UC). This highlights the issues the introduction of UC has caused, drawing on the voices and experiences of people affected, as well as in depth analysis of the data they have provided. Our findings have helped inform our key recommendations for moving forwards, so if the newly re-appointed Secretary of State for Department for Work and Pensions, Amber Rudd, needs some new inspiration on how to change the functionality of UC for the better, I would highly recommend she read our report.
This research found that one in four (25%) people who had issues with their UC claim approached us because the payments they received were not enough to cover living costs. Often, this was due to people having a shortfall between their private rent and their inadequate housing element entitlement, which is calculated using Local Housing Allowance rates (LHA). We’ve looked at this issue, which is leading to deprivation and homelessness, in more detail here, while this particular blog will look at another major issue with UC: the five-week wait and associated deduction rates.
The long five-week wait
When a person makes an initial UC claim, they will not receive any money for the first five weeks while a month long income assessment takes place. This waiting period is causing extreme hardship and pushing people towards debt, rent arrears and ultimately homelessness. And this is reflected in the experiences of our clients, some of whom were threatened with eviction during this period.
In just one example, a client was self-employed but had to stop working due to ill health, so had made an application to UC. She had historic rent arrears due to periods of poor health through her working life. However, she was making regular payments to bring these down with court agreed payments and she had not been at risk of eviction for some time. Upon making a UC application, her housing benefit automatically stopped and she did not receive a payment for five weeks. Because of this, her arrears reached over £1000 in this time and her landlord applied for an eviction warrant.[1]
Others were prevented from applying for alternative housing because of arrears accumulated:
One client of ours had a disability that meant he used a wheelchair. His house was not appropriately adapted and so he needed to move to suitable accommodation. However, he was prevented from moving by the local authority because he had accrued around £500 in rent arears as a result of his switch to UC and the five-week wait. His switch over to UC had stopped him getting a home he could access.[2]
No one should have to remain in unsuitable accommodation because of arrears. And this is even more unacceptable when the arrears are not the fault of the tenant, but of UC. Arrears on the former tenancy can be paid off incrementally once the person has moved to more suitable accommodation.
Advance payments just delay hardship
In one in 10 (10%) cases we analysed, people struggled with the impact of the five-week wait. However, the numbers affected by the five-week wait are likely to be even higher when you consider those affected by the high deduction rates under UC. This is because the only option for many to get through the five-week wait is to take out an advance payment from the Department of Work and Pensions (DWP) – a loan that’s paid back through astonishingly high deductions.
When we investigated the UC issues people had approached us with further, we found that in 20% of cases people were overwhelmed by having to pay back loans to DWP at high deduction rates. These deduction rates were frequently as a direct result of people having to take out an advance payment to see themselves through the five-week wait.
Many people we helped had 40% of their income deducted to pay back their advance. This will be lowered to 30% in October 2019, but this is still a very high proportion of income to be deducted every month.
Other, non-DWP debts are also deducted on top of this 40% total, so our clients can end up with very little money to live on every month:
One example is our client who had the usual 40% deducted from her standard allowance, mostly because of her advance payment. On top of this, she also had council tax arrears to pay as well as a monthly shortfall between her rent and the LHA/housing element she was receiving. A full 66% of her standard allowance, including her rent shortfall, was deducted. This meant she was left with just over £100 to live on per month after paying her rent with the shortfall.[3]
As this illustrates, the five-week wait is extremely punitive and advance payments do not solve it. As we’re seeing across the country, they just kick the impact further down the path. If Amber Rudd is serious about making a substantial difference to those claiming UC, she must increase LHA rates so that they cover rents while the five-week wait must be scrapped.
Shelter are supporting the Trussell Trust’s campaign to end the five-week wait of Universal Credit. To sign up to their #5weekstoolong campaign, and email the Chancellor asking him to end the five-week wait, please visit their website here.
[1] Some details altered for anonymity
[2] Some details altered for anonymity
[3] Some details altered for anonymity
