Long delays for Universal Credit payments

Government statistics out today, confirm that 23% of new Universal Credit (UC) claims are not paid on time. When “on time” for most people claiming UC means one month and fourteen days after first claiming, that is an extraordinary failure to provide essential support to low income households.

Universal Credit replaces benefits like Jobseeker’s Allowance (JSA), Child Tax Credit and Housing Benefit. Delays in payment mean households will be short of money for their basic living costs, their rent and money to support their children. It’s not just part of their incomes that they are missing. It’s all of their income.

It is worth comparing this processing time to the old benefits UC is replacing. Claims to JSA and similar benefits like Income Support or Employment and Support Allowance take around 10-14 days to process with payment shortly after. Claims to Tax Credits take around 4 weeks to process. New Housing Benefit claims vary dramatically between local authorities with some councils taking only 4-5 days and others well over 30 or 40 days, the average being around 22 days. So, new UC claims take substantially longer to process than it takes to get a basic income out to a JSA claimant and weeks longer than even complicated HB claims or the notoriously slow Tax Credits.

Long delays by design

Universal Credit is a monthly benefit designed to be paid in arrears. From the outset, the government has always intended for payments to be made significantly later than is typical for most of the benefits it is replacing. In order for the UC back-office processor to know what has happened in the previous month (the ‘assessment period’ they are interested in), they need to wait until the month is up. They then need to wait until all the information is collected about that month and then do the work to process the claim. They give themselves a week to do this paperwork.

Added to this is the fact that the majority of new UC claims have no entitlement for the first seven days. This waiting period means that the month long assessment period doesn’t start until a week after the claim is first made. So that gives us one month and fourteen days in total from the claim to the point at which a payment is made. This has always been the government’s plan and it is unlikely to change.

What can be done about it?

The primary tool used to mitigate this long delay is the advance payment. Around 49% of new claims to the UC full service receive an advance payment to tide them over until their actual payment is made. This is most frequently £100-200 but can be more than £600 and up to 50% of the claim’s expected entitlement. This is certainly helpful but, as it needs to be recovered from future payments, it puts claimants immediately on the back foot.

UC has always been designed in a way that makes it difficult for claimants to manage early on. That only three quarters of claimants are getting all of their entitlement paid in even this lengthy time frame is outrageous. The Scottish government is looking at more frequent payments of UC. How this will work will be interesting to see as it is at odds with the monthly assessment period but it must be worth experimenting with the payment cycle to mitigate the very real problems UC has at its heart.