Advance Payments – Kicking the can down the street

by CARIDON LANDLORD SOLUTIONS

9:42 AM, 21st February 2020
About 8 months ago

Advance Payments – Kicking the can down the street

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Advance Payments – Kicking the can down the street

This week, the final episode of the BBC2’s “Universal Credit: Inside the Welfare State” aired. Amid mounting criticism, DWP opened the door to BBC cameras. Among the various topics on the final episode, the problems associated with advance payments took centre stage.

The final episode took place in Bolton, which has unusually high levels of unemployment for people aged between 17 and 24. Around 500 people move onto Universal Credit every month.

Moving onto Universal Credit can be problematic for new claimants due to the five week wait between applying and receiving the first payment. Universal Credit is also paid in arrears, meaning it can be very hard for people to effectively budget or plan ahead. They are offered an advance payment which must be paid back, deducted from their monthly UC payments.

Universal Credit is designed to help people who are out of work, long-term sick or on low-paid, short-term or zero-hour contracts. However, the five week wait and offer of an Advance Payment is causing a string of other problems. UC also varies for those who have changing work hours making it impossible for them to understand how much they will have from one month to the next.

Claimant Jenny, who is 20 and has been unemployed for nine months following a serious assault, took a zero-hour contract job at a new restaurant, but her £6.30 an hour wages and meagre benefits left her struggling to pay rent for her £60-a-week flat.

Jenny was forced to apply for a £250 advance on her Universal Credit, essentially a loan which will be deducted from future payments over the next 12 months. Although Universal Credit tops up her salary, her benefits reduce by 63p for every pound she earns. Following a bad fall, Jenny then had to take 10 days off work, and with no pay she had to take another UC advance.

Jenny is clearly ambitious and desperate to find a full-time job, having previously been a hairdresser, but as a vulnerable young woman it was hard to watch the spiraling situation that she found herself in.

In another case, mum-of-one Paula recently moved in with her partner, the change of circumstances means Paula has to move onto Universal Credit from Job Seekers Allowance and Housing Benefit. She took the maximum advance payment, which at first she was thrilled about. However, when her first UC payment arrived the reality hit.

Along with deductions for rent, previous debts and the Advance Payment, Paula’s UC payment was cut from £1118 to just £532 per month, leaving her just £17 per day to live off. She later said it was the worst decision she had made. It is clear Advance Payments are too tempting for vulnerable people who struggle to manage their finances in the first place. It’s just kicking ‘the can’ down the street. It doesn’t go away, it just pushes it further away, leaving people in debt for even longer.

We know there are situations where Universal Credit works, but it isn’t effectively taking into account individual circumstances and so it is leaving people constantly chasing their tails, pushing them into further debt and unable to manage their own finances.

From watching the series, its clear to me that this is not the faceless system that ministers thought it could be. An online system is all well and good, but claimants need that human assistance and support. They need advice, and someone to really explain the realities of an Advance Payment, or an assessment to see if they will be able to feasibly live when the deductions kick in.

DWP can’t put the brakes on Universal Credit now, but changes have to be made to the five week wait and Advance Payments before rolling UC out further and allowing the problems to snowball throughout the country.

Contact Sherrelle for offline Universal Credit advice

Sherrelle is an independent consultant and is recommended by Property118 for landlords who require professional advice and assistance in regards to dealing with Universal credit related matters

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Comments

WP

10:47 AM, 21st February 2020
About 8 months ago

Completely agree with your perspective. The issue is that help is needed at the point a claimant starts the UC ball rolling. Problem is...not enough staff to spend the time to do this in the Job Centres from the offing. EVERYTHING has to be explained to an applicant. It's all a downward spiral after this otherwise.
I felt myself wanting to scream at the screen when there was a discussion about why the numbers of applicants were down...assumption seemed to be that the emphasis on claimants not applying for various reasons.... Very naive to think that you can get a real explaination about a lack of take up by asking those who had no choice in the matter. Ask the question to others like LL's who are asking tenants not to apply if they don't have to ...then you will find out the real reason why the take up isn't great! Or perhaps look at the fact that WHY those who have applied have done so - you may find that Councils are 'firmly suggesting' (read pushing') the homeless into UC as it provides a Council financial kick back give a true picture??
I believe an experienced answer outweighs assumptions when you ask a question!

John Frith

14:31 PM, 22nd February 2020
About 8 months ago

Am I the only person to notice the similarity between claimants mismanaging housing payments being made to the tenant, (rather than the landlord), and claimants mismanaging advance payments of UC? The pressures leading to this behaviour is the same.

Divorced from reality, the politicians can talk about claimants "taking responsibility" to manage their finances, but the reality is that with a system full of cracks for them to fall through, and without any support to make the transition successfully, claimants are effectively being set up to fail, at great cost to the claimants, landlords, and the taxpayer.


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