CASE: half of customers forced into debt when accessing Universal Credit

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CASE: half of customers forced into debt when accessing Universal Credit



Advice for citizens of Scotland (CAS) reiterated its call for the abolition of the five-week wait and the introduction of a non-refundable assessment period grant for anyone claiming universal credit to prevent people from are seriously in debt.

The recommendations are in a new report from the charity, including a first-of-its-kind survey of CAB clients who had sought advice from Universal Credit.

While some elements of Universal Credit’s design, such as its conditionality and identity verification requirements, were “turned off” during the pandemic, other aspects remained in effect.

Most important for people claiming universal credit is the five week wait for the first payment, an issue that was repeatedly identified by survey respondents as causing stress and anxiety:

• Almost half (48%) said they had to borrow or ask for an advance to make it through the five-week wait.

• Of those who borrowed to get through the five-week waiting period until they get their first payment, the majority (65%) said they will have difficulty repaying the loan.

• Singles, homeless people, and those with no final salary were more likely to need loans during the five-week wait, putting them in debt before their UC payments even started.

• Lone-parent families were also more likely to borrow during the five-week wait, meaning that children in these families may face significant financial hardship before the first payment.

Citizens Advice Scotland said the five-week wait frequently forced CAB clients into debt, debt and serious arrears. For those who have claimed an advance payment from the DWP, it is clawed back on their next 12 UC payments, meaning those already living on the breadline have seen their income drop for a year due to the wait. of the first payment. This was only multiplied by the pandemic, where people from better-paid backgrounds will apply for the first time and face a much larger-than-normal income shock.

Nina Ballantyne, CAS Social Justice spokesperson, said: “The CAS has long campaigned to end the five-week wait for the first payment, and today’s research shows the tremendous harm it has continued to cause people throughout. of the pandemic.

“The five-week wait punishes the most vulnerable; those who have no savings and have no family or friends to borrow from; and those who are paid weekly and have no last monthly payment to rely on. Many are also reluctant to take on more debt. People we spoke to said they had no choice but to go into debt on a prepayment or fight day to day during the five week wait because they didn’t had nowhere to turn.

She added: “Social security is a right that we should all be able to access when we need it, but the five-week waiting and prepayment system instead creates delays and difficulties.

“Abolishing the five-week wait and replacing it with a non-repayable grant would increase universal credit to function as an immediate social safety net. Instead of getting people into debt and struggling to keep food on the table, it would keep people out of absolute poverty, make it easier to find a good job, and ensure that everyone is a part of our recovery afterwards. the pandemic. “


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