The report by the National Audit Office (NAO) said the Department for Work and Pensions (DWP) needs to do more to support vulnerable people and others claiming Universal Credit, revealing that disabled claimants and people on low incomes are more likely to claim advances and have other debts to repay.
Claimants and representative organisations told the NAO that the wait for the first payment contributes to financial hardship and debt, despite the availability of advances.
The SNP said the solution is to turn advance payments into non-repayable grants once the claimant has been deemed eligible for Universal Credit.
This would remove the need to reverse the five-week wait, which the DWP has said would be “operationally challenging”, and minimise the risk of fraud – the reason given by the UK government for not implementing grants instead of loans.
The architect of Universal Credit, Iain Duncan Smith, has admitted that keeping Universal Credit advance payments as loans instead of grants “is a policy decision, not a structural issue, so whatever the Government decides to do it is wholly feasible to do it.”
“The Chancellor’s statement was a missed opportunity to put building a fairer society at the heart of the recovery, with no measures to put cash in the pockets of those who need it most and lift people out of poverty,” said the SNP’s Neil Gray.
“And the Tories are missing another opportunity to address rising debt issues by refusing to make advance payments grants instead of loans.
“Addressing this issue is not an impossible task, as the SNP and leading anti-poverty organisations have repeatedly made clear by proposing a simple solution. The Tory government’s decision to keep advance payments as loans – which are pushing people into, or further into, debt – instead of making them non-repayable grants is a political decision, and nothing to do with operational or fiscal challenges.
“There is overwhelming support for the UK government to implement our proposal, and with unemployment rising and incomes being cut back, it is more critical than ever that the UK government starts taking serious action to address rising poverty and rising debt.”
According to the NAO Report – “Universal Credit: Getting to first payment” – 80 per cent of claims by low-income households, 67 per cent of claims including someone who has limited capability for work because of a disability or health condition, and 70 per cent of claims including a disabled child had a deduction applied to their first payment to cover advances repayments or other debts. This compares with 61 per cent of all claims.
Around 57 per cent of households making a new claim take a Universal Credit advance payment to help them manage during the five-week waiting period until their first payment.
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