The coronavirus pandemic has shut down the UK economy within a matter of weeks, risking one of the worst recessions in living memory.
If there’s one thing people need during an economic crisis, it’s a decent safety net to protect them if they lose their jobs.
Unfortunately, Universal Credit (UC) – the government’s flagship benefits system – offers nowhere near enough support to see working people through the hard times to come.
According to the latest data, there have been 2.6 million declarations for UC from March 16 to May 12- almost five times the rate just before the crisis hit. During the same period just under a million advance payments have been made to claimants.
But at just £94 a week for a single person, it’s not enough to live on. On top of that, new UC claimants have to wait a whopping five weeks before getting their first payment.
There’s no justification for making people wait so long for vital support during a crisis like this.
That’s why we’re urgently calling for the government to end the five-week wait by converting existing emergency payment loans to grants.
And it must boost the level of support offered to claimants to a level that meets the cost of living.
People who lose their job can’t afford to wait over a month for so little support. The government must act now to help them.
The UK’s social safety net was broken long before Covid-19 arrived on these shores.
According to a damning 2019 UN report, years of austerity policies had ‘systematically and starkly eroded’ our social safety net with ‘tragic social consequences’.
It doesn’t help that the roll out of UC was such an unmitigated disaster, pushing those it was designed to help further into poverty.
That’s why we were calling for the government to stop and scrap UC before it did any more damage .
For years the TUC argued that UC was not enough to live on, that the application process was too complex and that people had to wait too long to get their first payment.
Now all those chickens are coming home to roost at the worst possible time.
With significant drops in income likely in the weeks and months to come, the government urgently needs to design a wider package of support for households. To find out more about our plan to fix the UK’s broken safety net, read our recent report here .
The government has made some changes to social security in the wake of the Covid-19 crisis.
One of the first things it did was listen to trade union demands and remove the three-day wait for statutory sick pay to kick in.
Self-employed people also no longer need to meet a minimum income floor in order to qualify for UC.
And the basic payment for UC has been increased for everyone by £1,000 a year – meaning a weekly amount of £94 a week (matching the level of statutory sick pay).
This is progress, but an extra £20 a week isn’t going to do much to help those who have suddenly lost their entire income.
And let’s face it, the fact that they will all have to wait five weeks for that first payment means many will be enduring serious financial hardship right now.
Everyone has to wait five weeks for their first payment, whether they are a new claimant or have been migrated onto UC from a legacy benefit.
So, what’s the logic behind it?
The government argued that an assessment cycle with a monthly payment in arrears would ‘mirror the world of work.’
But not everyone in ‘the world of work’ is paid monthly, previous analysis has shown that most new UC claimants who had been in employment had been paid either fortnightly or weekly in their last job.
Most low-paid workers don’t have enough savings to get them through this wait. Even before Covid-19, low income households were least likely to be able to save because they spend a much greater proportion of their income on basic essentials (almost a third spend 60 per cent of what they earn on essentials).
Also, five weeks is only the minimum wait for that first payment. Administrative delays mean it can often be much longer.
Instead of scrapping the five-week wait, the government thinks advance payments could be the solution.
But these ‘payments’ are nothing more than loans that have to be deducted from future UC payments. In other words, those desperate for support go onto UC already in debt.
On top of this, many claimants are often paying other deductions, such as council tax arrears, utility payments and tax credit overpayments.
The five-week wait for the first payment of UC was pushing people into poverty and debt before coronavirus hit, with rising numbers being referred to foodbanks. Now with rising numbers applying for UC more people will face hardship. Food Banks are already seeing a massive increase in demand, during the last two weeks of March 2020 food parcels increased by 81% compared to the same period in 2019.
There is simply no justification for the five week wait for Universal Credit - it has to go.
We are urgently calling on the government to end the five-week wait by converting existing emergency payment loans to grants.
We need your help to build up our evidence on why the five-week wait must go. Tell us your experience or thoughts about Universal Credit and let's put a stop to the five-week wait.
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