Universal Credit – can benefits system cope with the coronavirus surge?

As the coronavirus lockdown takes its toll, some 950,000 people have already applied for Universal Credit over the past fortnight. Under normal circumstances the expected number of applications over the course of this two week period would be 100,000. A further surge is anticipated when the next numbers are published.

The massive influx of cases represents something of a trial by fire for a benefits system which has been faced criticism since its inauguration.

Universal Credit was designed to make claiming benefits simpler, consolidating a number of separate benefits into a single payment and system. Critics have said the system in fact has created a host of new problems, attributable in large part due to austerity meaning the system received insufficient funding and was insufficiently generous.

The minister who designed and implemented the system, Iain Duncan Smith, resigned from the cabinet over this in March 2016. Still, IDS himself has also faced criticism over how the system is designed with regards to delays to payments, work allowances, and disabilities testing.

Concerns over how joint payments for couples further disempower victims of abusive relationships will likely gain prominence now given the apparent spike in domestic violence during quarantines.

Now there are claims that the administrative system, also the subject of ongoing criticism, has started to creak under the weight of applications. Potential claimants have reported finding themselves in online or phone queues tens of thousands of people long moving at a glacial rate.

In response the DWP has moved 10,000 staff to the frontline to help process claims, something that is possible as DWP staff have experience working in job centres processing these claims. More staff are being recruited as well.

A DWP spokesman said that the system was “standing up well” in the face of an unprecedented number of claims. Similarly, Katie Martin, Director of External Affairs at Citizens Advice, agreed that the system was “standing up ok so far”. Claimants have been able to get their applications processed once they manage to get to the head of the queue, and the DWP was now ringing people back instead of keeping them on the line for hours.

For IDS this is vindication. “Despite all the nonsense talked about Universal Credit this crisis proves why we had to make the change,” he said.

According to him the single online and substantially automated system was designed to deal with surges in demand which used to overwhelm the benefits system, as the effects of the 2008 crash did, although the recent wave of applications due to the quarantine was “beyond anything originally expected”. IDS also suggested that the “flexibility” of the system would allow employers to keep staff on at reduced hours as opposed to furloughing or letting them go.

However, Martin warned that the true test would be if the system kept functioning properly in the coming weeks – especially as it is not clear if the high number of applications will abate or not.

As things stand the system is designed to make the first payment 5 weeks after a Universal Credit application is approved, with a loan available to bridge the waiting period. Previously, many have encountered delays to their first payments and loans.

Martin said that while things were better in this regard than they had been a year ago, when the system’s poor reputation was “warranted”, she is worried that if the DWP cannot keep pace with the tsunami of new applications these delays might return.

Nevertheless, Martin is keen to encourage potential claimants to apply for Universal Credit as soon as possible to reduce the time before they receive their first payment. She also claims that the initial loan available before payments are made should be turned into a grant, or the repayment at least reduced or delayed.

IDS, for his part, warns that attempting to change the system in the middle of a major crisis would be a bad idea – and any adjustments can  be made once claimants are settled in it.

If you are thinking of applying for Universal Credit a guide to the system can be found below.

More information can be found here and here.

• Your Universal Credit allowance is deposited in your bank, building society, or credit union account once monthly, or twice monthly if you live in Scotland. If you live with a partner claiming Universal Credit you will be paid jointly. It is possible to request a different payment schedule or separate payments from your partner.

• The first payment should arrive in five weeks after the application is approved. If you need help with living costs before your first payment arrives you can apply for an advance. This is given in the form of a loan that you then pay back via deductions from your monthly Universal Credit allowance.

• The monthly payment varies based on your age and whether you have a partner. Currently the payments are.

Single and under 25 £251.77 Single and 25 or over £317.82 In a couple and you’re both under 25 £395.20 (for you both) In a couple and either of you are 25 or over £498.89 (for you both)

These payments are set to increase on 6 April with £1000 a year, about £83 a month, rise in the standard allowance plus a 1.7% rise in line with inflation.

• The standard Universal Credit allowance will be increased if you have children – subject to certain limits.

• The standard Universal Credit allowance will also be increased if you have a disability, a health problem, or are terminally ill. The disability assessments have been temporarily suspended to protect the vulnerable from coronavirus.

• You can also apply to have Universal Credit cover your housing costs. This can be a payment to cover rent and some service charges, or a loan to help with interest payments on mortgages or other loans taken out against your house.

• Income received from other benefits such as Jobseeker’s Allowance (JSA), Employment and Support Allowance (ESA), Pension Income, and few others is subtracted from your Universal Credit payment.

• However, income received from Child Benefit, maintenance payments, the Disability Living Allowance, the Personal Independence Payment, and income from boarders and lodgers will not subtracted from your Universal Credit payments.

• You are also allowed to work while on Universal Credit but must declare your income. Every £1 earned from work reduces your Universal Credit payment by 63p. If you are disabled or looking after a child you can earn up to £503 from work without your payments being reduced, though if you are receiving help with housing costs this is reduced to £287.

• You are eligible to apply for Universal Credit if you meet the following conditions 1) you are out of work, or have a low income 2) you are over 18 and either you or your partner is under the State Pension age, and 3) you have less than £16,000 in savings. If you live with your partner their income and savings are taken into account.

• It is possible to apply for Universal Credit if you are 16/17 but will only be eligible if you are disabled, pregnant or caring for a child, or estranged from your parents and not under the care of local authorities.

• You are not eligible for Universal Credit if you are receiving statutory sick pay. However, if you are self-employed you may be eligible to receive Universal Credit and the Employment and Support Allowance.

• Applications can be made online. If you live with your partner you will need to apply as a couple, regardless of whether or not you are married. In order to complete your application you will need 1) your bank, building society, or credit union account details (call the helpline if you do not have one), 2) an email address, 3) information about your housing such as rent payments, 4) details of your income, 5) details of any savings and investments, 6) details on how much you pay in childcare if your applying for help with childcare costs, and 7) proof of identity such as driving license, passport, or debit/credit card.