Universal Credit claimants will be £20-a-week better off from today – as applications for the controversial benefit surge amid the coronavirus pandemic.
Nearly a million people made successful new claims for Universal Credit (UC) in the last two weeks of March, as the lockdown has forced workers to stay at home.
Chancellor Rishi Sunak had previously announced a £7 billion boost to benefits as part of a package of measures aimed at supporting people and businesses through the Covid-19 outbreak.
This includes a £20-a-week increase to the standard rate of UC, on top of the annual uprating, starting from today and continuing for the rest of 2020/21. This means that for a single claimant, aged 25 or over, the standard allowance will increase from £317.82 to £409.89 per month.
The government has also relaxed some of the rules and requirements of UC, including those relating to self-employed claimants.
But there are concerns over whether the system will be able to cope with the sudden and massive increase in demand resulting from the lockdown.
There were 950,000 successful applications in the two weeks from March 16, compared to 100,000 in a normal fortnight, with reports of some people spending days on the phone waiting to get through.
The Department for Work and Pensions says it has allocated an extra 10,000 staff to deal with the new claims, with more on the way.
In February there were 22,094 people receiving UC across North Staffordshire, but it’s likely that the current number is much higher.
Simon Harris, chief executive of North Staffordshire CAB, fears that the changes to UC may not be enough for some claimants.
In March the CAB saw a 45 per cent increase in the number of clients needing help claiming UC.
Mr Harris said: “It’s think it’s too early to tell whether the system will be able to cope with the surge in demand. I haven’t seen any local figures yet but I expect that the national increase has been reflected here.
“The increased payments they’ve put in place are welcome, although I think there will still be some people who will still be left out of pocket.
“A lot of people of people have applied for UC because they don’t know how they’re employer is going to treat them, and for who furloughing might not be appropriate.
“They will be agency workers who might not be able to be furloughed. And there will be people who own shops which have had to close, as well as self-employed people such as window cleaners who have seen their work dry up.
“As the support for self-employed people has not yet been widely publicised, UC is bearing the brunt at the moment, as claimants look for something to tide them over.”
Universal Credit, which was introduced in 2013, replaces six benefits for working age people, including Jobseeker’s Allowance and Housing Benefit.
The system has been plagued with problems, and the migration of claimants to UC is now not expected to be complete until 2024.
One of the biggest issues has been the five-week wait successful applicants must endure before they receive their first payment, which many critics say leaves cash-strapped claimants desperately short of money.
People can ask for an advance payment loan, and more than a quarter of the new claimants have done so.
But campaigners, including the Salvation Army, have called for this payment to be in the form of a grant, so people do not end up in debt.
Mr Harris agrees, saying the delay in payments could be a particular problem if people are relying on UC as a short-term measure.
He added: “I think it should be a grant rather than a loan. A loan has to be paid back later, and so all this does it push the problem back.”
The Salvation Army says the UC loans could result in a ‘coronavirus debt crisis’.
Rebecca Keating, the Salvation Army’s director of employment plus, said: “Thousands of people who never thought they would have to rely on state support are now making a Universal Credit claim.
“Many of these will be forced to take out the bridging loan which will just move their money problems five weeks down the line.
“We are particularly concerned by those working on zero hour contracts that don’t have the same legal rights of other employees. Many will not have a financial safety net to help avoid getting into debt straight away.”
Along with the increased payments, the government has changed some of the rules relating to self-employed claimants.
UC payments to self-employed people are usually calculated using a ‘minimum income floor’, which is their assumed level of income. This will be temporarily relaxed for the duration of the outbreak.
New claimants will not be required to attend a Jobcentre, with all interviews now taking place over the phone.
The government insists that UC is working. A DWP spokesman said: “Universal Credit is delivering in these unprecedented times.
“With such a huge increase in claims there are pressures on our services, but the system is standing up well to these and our dedicated staff are working flat out to get people the support they need.
“We’re taking urgent action to boost capacity – we’ve moved 10,000 existing staff to help on the front line and we’re recruiting more.”
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