A FIVE-week wait for Universal Credit is pushing vulnerable people into using high cost credit and loan sharks, a new report suggests.
StepChange Debt Charity found that at least one in 10 hard-up families in receipt of benefits has had to turn to an illegal lender to help them meet the cost of living as a result of the applying to the new system.
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Of those surveyed, 43 per cent admitted that they had used credit, such as rent-to-own firms, to pay for essentials in the past year.
The charity is warning that the sky-high interest-rates charged by loan sharks and some rent-to-own companies force those who are already struggling further into debt.
As part of its Problem Debt and the Social Security System report, it found that the delay for the first payment, errors during the application process, deductions from payments to repay debts and unpredictable payments is to blame.
The Department for Work and Pensions (DWP), the government body behind the welfare system, does offer new claimants an “advance payment” equal to the first month’s payment, to tie them over the five-week wait.
What to do if you have problems claiming Universal Credit
IF you’re experiencing trouble applying for your Universal Credit, or the payments just don’t cover costs, here are your options:
Apply for an advance – Claimants are able to get some cash within five days rather than waiting weeks for their first payment. But it’s a loan which means the repayments will be automatically deducted from your future Universal Credit pay out.
Alternative Payment Arrangements– If you’re falling behind on rent, you or your landlord may be able to apply for an APA which will get your payment sent directly to your landlord. You might also be able to change your payments to get them more frequently, or you can split the payments if you’re part of a couple.
Budgeting Advance – You may be able to get help from the government to help with emergency household costs of up to £348 if you’re single, £464 if you’re part of a couple or £812 if you have children. These are only in cases like your cooker breaking down or for help getting a job. You’ll have to repay the advance through your regular Universal Credit payments. You’ll still have to repay the loan, even if you stop claiming for Universal Credit.
Cut your Council Tax – You might be able to get a discount on your Council Tax or be entitled to Discretionary Housing Payments if your payments aren’t enough to cover your rent.
Foodbanks – If you’re really hard up and struggling to buy food and toiletries, you can find your local foodbank who will provide you with help for free. You can find your nearest one on the Trussel Trust website.
But these are actually loans that need to be repaid over the following 12 months.
Deductions are automatically taken from the first month’s payment, regularly leaving families short.
This is why The Sun has launched the Make Universal Credit Work campaign, to help millions of households kick their debt and get back into work.
Overall, the research suggests that people who are claiming Universal Credit are three times more likely to be in problem debt than those who don’t get help with benefits, and twice as likely as those who are still on the old welfare system.
Shockingly, this is something the charity has seen through its own work, with over half of people it helps who are also on Universal Credit being classed as “destitute”.
This is when someone lacks at least two of six key essentials in the past month, including accommodation, two meals a day, heating and lights your home, appropriate clothing for the weather and basic toiletries.
Almost 27 per cent of the people on Universal Credit that the charity has helped has been forced to rely on a food bank in the past month.
Head of policy at the charity, Peter Tutton said: “There is an urgent need to rethink the way that Universal Credit and legacy benefits can help people recover from financial difficulties instead of making those problems worse.”
The Sun wants to Make Universal Credit Work
UNIVERSAL Credit replaces six benefits with a single monthly payment.
One million people are already receiving it and by the time the system is fully rolled out in 2023, nearly 7 million will be on it.
But there are big problems with the flagship new system – it takes 5 weeks to get the first payment and it could leave some families worse off by thousands of pounds a year.
And while working families can claim back up to 85 per cent of their childcare costs, they must find the money to pay for childcare upfront – we’ve heard of families waiting up to 6 months for the money.
Working parents across the country told us they’ve been unable to take on more hours – or have even turned down better paid jobs or more hours because of the amount they get their benefits cut.
It’s time to Make Universal Credit work. We want the government to:
- Get paid faster: The Government must slash the time Brits wait for their first Universal Credit payments from five to two weeks, helping stop 7 million from being pushed into debt.
- Keep more of what you earn: The work allowance should be increased and the taper rate should be slashed from from 63p to 50p, helping at least 4 million families.
- Don’t get punished for having a family: Parents should get the 85 per cent of the money they can claim for childcare upfront instead of being paid in arrears.
Together, these changes will help Make Universal Credit Work.
Join our Universal Credit Facebook group or email UniversalCredit@the-sun.co.uk to share your story.
StepChange wants to see an end to the five-week wait, as well as allowing people to choose whether they receive payments more frequently than the monthly.
It also wants to see housing benefit to be paid directly to the landlord as a default option and introducing discretionary hardship payments for those who can’t afford to repay advance loans.
Iain Porter from the Joseph Rowntree Foundation, add: “The government has rightly said it will end the benefits freeze, but this will not undo the harm already caused to low-income families.
“Ministers must go further by ending the five-week wait for the first Universal Credit payment and ensure the system of advance payments does not push people into debt from the very start of their claim.”
A DWP spokesperson told The Sun that it was continuing to invest £95million a year on working age benefits.
They added: “Claimants can get paid urgently if they need it and 95 percent of payments are made in full and on time.
“We’ve changed the system so people can receive even more money in the first two weeks than under the old system, and Alternative Payment Arrangements to landlords can already be made for claimants struggling to pay their rent.
“People use foodbanks for many reasons, so it’s misleading to link that to any single cause.”
If you’re struggling on Universal Credit, you may be able to get help from the Flexible Support Fund, and you won’t have to pay it back.
