Third Report: Universal Credit: the wait for a first payment

The government's response quotes and then rejects a separate recommendation about commissioning research on food bank use, rent arrears, and mental health, rather than addressing the committee's conclusion about the impact of the Universal Credit waiting period.

The government explicitly rejects the recommendation to publish its analysis of foodbank use drivers, stating that due to resource reallocation for the COVID-19 pandemic, it will not be conducting or commissioning any research.

The government's response does not address the recommendation to conduct further research into the link between Universal Credit and food bank use, or to encourage the Trussell Trust to share its data. It instead references ministerial meetings with stakeholders and their publication.

The government rejects the recommendation to investigate the link between Universal Credit and rent arrears, citing resource reallocation due to the pandemic and arguing that attributing arrears solely to UC is simplistic.

The government rejects the implicit recommendation to conduct further research and evaluation to understand the drivers and clinical impact of psychological distress linked to Universal Credit, citing resource reallocation due to the COVID-19 pandemic and outlining other support measures.

The government rejects the recommendation to conduct or commission research on the impact of Universal Credit and the five-week wait on food bank use, rent arrears, and mental health, citing resource reallocation due to the COVID-19 pandemic and highlighting other support measures.

The government states that Ministerial meetings with stakeholders are already published quarterly on GOV.UK but rejects publishing details of every engagement, including topics discussed and actions taken, citing the need to maintain trust and partnership with stakeholders.

The government acknowledges the concern for a seamless transition but states that no one has to wait five weeks for money due to advances and run-ons. It maintains that suitable provision is in place and implicitly rejects the premise that their transition is not seamless.

The government response discusses changes to the Universal Credit deduction cap, reducing it from 30% to 25% from October 2021, and the rationale behind setting the cap, but does not address the committee's concerns regarding the five-week wait or two-week run-on payments for legacy benefits.

The government rejects eliminating the five-week wait by continuing legacy benefits, citing existing advance payments and run-ons. It also rejects offering fortnightly payments by default, stating that monthly payments prepare claimants for work and Alternative Payment Arrangements are available case-by-case.

The government does not provide the requested detailed analysis of the committee's recommended approach or a cost comparison, instead reiterating its stance on existing provisions and rejecting the core recommendations.

The government discusses existing repayable Advances for financial support, the Breathing Space scheme, and increased funding for debt advice, but does not commit to the recommended non-repayable 'starter payment'.

The government rejects the need for a starter payment, stating that New Claim Advances are already available, and introducing non-repayable advances would increase fraud risk and administrative burden.

The government rejects the recommendation to pay all first-time Universal Credit claimants a 'starter payment,' stating that New Claim Advances are already available and that non-repayable advances would increase fraud risk, administrative burden, and could lead to inappropriate gains.

The government's response discusses the availability of New Claim Advances and the existing fast-track process for terminally ill claimants, but does not address the recommendation to publish its review of the Special Rules for Terminal Illness by 30 November.

The government rejects the recommendation for further support, including starter payments or enhanced backdating, for terminally ill claimants, stating that existing New Claim Advances negate the need for a starter payment and that UC already has an established fast-track process for these claimants.

The government reiterates its view that advances are not loans and describes existing measures like limiting advance amounts, encouraging claimant consideration, Work Coach budgeting support, and the ability to defer repayments for up to three months. It is also considering automatic referral for budgeting support.

The government's response discusses explicit consent rules, data protection, and stakeholder engagement, but does not address the recommendation to use requests for substantial advances as an indicator to provide early support to struggling claimants.

The government explicitly rejects the committee's finding, reiterating that a new claim Advance is not a loan but rather a spreading of UC entitlement. It explains that advances are limited to estimated awards, with support available for budgeting and repayment deferrals for hardship cases.

The government's response focuses on publishing data for Work Capability Assessments and a future Health and Disability Green Paper, completely failing to address the recommendation regarding renaming Advances or providing budgeting support.

The government's response discusses Work Capability Assessments and payment timeliness, rather than addressing the committee's concerns about the burden of Advance repayments.

The government's response does not address the recommendation to accelerate the extension of the repayment period, lower the deduction cap to 10%, or bring changes in sooner than planned, instead referring to encouraging HMRC to reduce historic debt.

The government's response discusses encouraging timely claims, the 'Help to Claim' programme, and backdating provisions, but does not address the committee's recommendation regarding deduction caps or using data to help claimants with debt without further reducing their Universal Credit award.

The government rejects publishing additional specific data on advance repayment deferrals, stating no plans to do so at this point, though it will include general information on advances in its annual report. It does not address the recommendation for work coaches to proactively inform claimants of the deferral option.

The government commits to implementing the Breathing Space scheme for benefit overpayments and legacy benefit advances from May 2021. However, UC Advances and Third Party Deductions in UC will only be included once the full implementation of UC is complete due to system complexities.

The government rejects the recommendation to offer direct payment of the housing element of an Advance to landlords. It states that existing Managed Payments to Landlords are already available and cautions against the potential for landlord pressure if this option were introduced for advances.

The government states that existing provisions, such as Managed Payments to Landlords and a new online service for direct rent payments, already sufficiently address the committee's suggestion. They argue against prioritising advances due to potential risks and highlight specialist budgeting support.

The government's response discusses split payments for couples and managing finances jointly, failing to address the recommendation to maintain Universal Credit and Local Housing Allowance increases.

The government acknowledges the committee's observation about Help to Claim's focus, but defends the service's current scope and positive reception. It states that Help to Claim signposts users to other support services for debt advice, budgeting, and digital skills.

The government rejects expanding Help to Claim to directly provide ongoing support like debt advice and digital skills. It states that Help to Claim already signposts claimants to other support services for these needs and defends the current scope of the service.

The government acknowledges the need for better tracking of claimants' needs and states that work is underway to collect sensitive information to provide more tailored support. It also notes that staff can already use pinned notes to flag ongoing easements.

The government states it is working on collecting sensitive information to provide tailored support and monitor improvements for specific claimant cohorts, and that vulnerable accounts can already be flagged. However, it does not commit to a formalised system or timeline for defining and identifying vulnerable claimants as comprehensively recommended.

The government defends its explicit consent policy for data sharing, stating it is exploring options with SSAC and stakeholders to improve the process but does not commit to publishing details of progress or considering an implicit consent model.

The government asserts that no one has to wait five weeks for UC payments, citing advances available from day one and two-week run-ons for legacy benefits. They state that sufficient provision is in place and reject the idea of continuing tax credits with UC or introducing APAs by default.

The government provides an update on Work Coach recruitment and details plans to maximise estates capacity, including using local authority space. However, they reject the request for monthly updates, stating they will provide 'relevant updates to Parliament' instead.

The government defends the current WCA assessment period for thoroughness and fairness, not committing to speeding it up directly. However, they commit to collecting and publishing WCA data and will explore assessment reform options in a forthcoming Health and Disability Green Paper.

The government rejects the recommendations, stating payment timeliness must be balanced with fraud reduction, and defending the existing WCA process which includes backdating awards if a delay occurs. They do not agree to pay claimants at the highest rate during WCA delays or limit repayments to only deliberate fraud.

The government acknowledges the impact of debt and explains existing support from Work Coaches and the Money and Pensions Service for claimants. They state an obligation to recover public funds but will continue to encourage HMRC to reduce historic tax credit debt.

The government rejects the recommendation for a 10% cap on debt repayments, stating its 30% cap balances claimant needs with responsible fund administration. It does not address recommendations to delay debt recovery until advances are repaid, write off debts over 6 years, or extend the FCA's approach to public sector debts.

The government agrees on the importance of timely applications and states that a UC Full Service Omnibus Survey published in February 2019 already investigated reasons for delayed claims, finding that a fifth of claimants delayed due to job seeking or lack of awareness.

The government rejects the recommendation, stating that UC is designed for quick claims at the point of need, and that extending backdating beyond one month could disincentivize this. They do not commit to reviewing evidence use for backdating, publishing work coach information, or increasing awareness.

The government rejects extending the backdating period beyond one month, arguing that it could disincentivize claimants from making their UC claims at the point of need. They reiterate that existing limited provisions and support are available for vulnerable claimants.

The government states the Universal Credit Transition Fund was suspended due to COVID-19 and highlights other existing funds like the Coronavirus Community Support Fund, Flexible Support Fund, and Help to Claim, without committing to renewing the specific Transition Fund.

The government acknowledges that claimants can struggle with monthly budgeting but states that Universal Credit already allows for more frequent payments (twice or four times monthly) and that Work Coach guidance already directs offering financial advice and Alternative Payment Arrangements.

The government reiterates that UC is paid monthly by default but more frequent payments (APAs) are available where claimants struggle. They state that existing guidance for Work Coaches already covers offering financial guidance and considering APAs, preferring a tailored, individualised approach over a universal offering.

The government states it has published guidance on APAs and routinely publishes data, but rejects expanding current reporting on unsuccessful applications. It acknowledges providing tailored support for split payments where appropriate but does not agree a broader review is needed.

The government rejects the recommendation to align Universal Credit payments with rent schedules, stating it is not appropriate due to potential difficulties if claimants change address, and highlights an existing payment alignment feature for social landlords.

The government commits to adding the recommendation to publish figures on claimants reverting from twice-monthly payments to its development programme. It also points to existing data on Alternative Payment Arrangements and data published by the Scottish Government.

The government will add the recommendation to publish figures on how many people revert to monthly payments to its programme for development, and notes the Scottish Government already publishes management information on Scottish Choices.

The government acknowledges the recommendation by stating it is already examining how to modernise payment services through its 'Future Payments' programme, targeted for completion by 2022/23. However, it does not provide the detailed strategy, timings, or engagement plans requested.

The government rejects the committee's characterisation of the Universal Credit IT system as rigid and clunky, instead asserting its agility and strong performance in supporting claimants throughout the pandemic, maintaining high payment timeliness.

The government rejects the recommendation to consider more flexible assessment systems, stating that such a system is not easily operationalised due to complexities with fluctuating earnings and multiple income sources, which would cause financial uncertainty and poor customer service.

The government rejects the proposed model for daily pay rate estimation and day-one payments, explaining it cannot be easily operationalised for claimants with fluctuating or multiple earnings due to reconciliation challenges and potential over/underpayments, but it does detail the data received from HMRC.

The government acknowledges the committee's recognition of Universal Credit's strong performance during the pandemic, highlighting its agile adaptation to support increased claims and maintained high payment timeliness.

The government states that no one has to wait five weeks for payment because advances are available and have been widely distributed, serving as a crucial support measure.