Struggling Universal Credit claimants signposted to advance payments

Universal Credit claimants will typically wait six weeks before receiving their first payment. While those who have applied immediately after leaving employment may be able to sustain themselves during this six-week period with their final payment of wages. However, research suggests that 45% of NI households have no savings making this long wait incredibly testing for certain households, particularly those who migrate from a fortnightly benefit to Universal Credit’s monthly payment system. 

These delays and the associated financial hardships have received much attention in Great Britain, with Work and Pensions Secretary David Gauke highlighting the availability of advance payments to mitigate against some of these difficulties.

What is an advance payment?

Advance payments are intended to support claimants in financial need who can’t manage until their first payment of Universal Credit. The amount advanced will be a maximum of 50% of the claimant’s first month’s entitlement.  However, when deciding how much to advance to the claimant, the decision maker will have to consider the claimant’s ability to repay it.

In legislation, such an advance is referred to as a “payment on account” and the legislation governing such payments in Northern Ireland is The Social Security (Payments on Account of Benefit) Regulations (Northern Ireland) 2016

Advance payments can also be made where an existing Universal Credit claimant has experienced a change in circumstances which will result in an increased benefit entitlement.

When can you apply?

Claimants can request an advance by calling the Universal Credit phone line on 0300 123 3017 or by requesting the advance in person during an appointment to verify elements of their Universal Credit claim. A claimant can apply for an advance payment of Universal Credit during the first assessment period, but cannot do so until his or her ID and bank details have been verified. As most claimants will have to serve seven waiting days, this means that the Universal Credit advance can usually be requested eight days after the claimant has submitted his or her claim and once ID has been verified. Claimants must request an advance at least three days before their monthly assessment period ends.

Who can apply?

Under legacy benefits, like Housing Benefit, claimants had a right to an interim payment of benefit in the event of any administrative delays in processing the claim. This is not the case under Universal Credit. Advance payments will only be issued if the Department for Communities is satisfied that the claimant is in financial need. Regulation 7 of The Social Security (Payments on Account of Benefit) Regulations (NI) 2016 defines financial need as “a serious risk of damage to the health or safety” of the claimant, the claimant’s child or the claimant’s partner. The Department for Communities has suggested that the following elements will be taken into consideration when determining if someone is in financial need:

• Does the claimant live with parents, relatives or friends?
• Did the claimant receive any final earnings or redundancy payments?
• Does the claimant have any savings?
• What are the claimant’s normal monthly outgoings?
• If the claimant had access to other resources, why is he or she in financial need?

This gives decision makers a considerable degree of discretion in deciding whether or not to authorise an advance payment. Housing Rights is interested to hear from people who have requested an advance payment, particularly any person whose request was denied.

Budgeting advance

A budgeting advance is also available to people in receipt of Universal Credit, although these payments are designed more to deal with unexpected expenses, than to help handle the wait for initial payment. Much like budgeting loans under the Social Fund, claimants must meet certain criteria in order to obtain a budgeting advance, including

• Being in receipt of the qualifying benefit for at least six months
• Having earned income below a certain threshold during the qualifying six-month period (£2,600 for a single claimant and £3,600 for a couple)

The claimant's earned income will be the same as that used for Universal Credit purposes during the relevant period, except in the cases of a person who is treated as self-employed, in which case the minimum income floor will be disregarded. 

Paying back an advance

The amount advanced to the claimant will be paid back through deductions from the claimant’s ongoing Universal Credit award. The amount deducted from each subsequent payment will be no more than the equivalent of 40% of the claimant’s standard allowance.  Claimants will be expected to repay their advance within 6 months, but claimants can request that payments be deferred for up to 3 months if repaying the amount within this 6-month timeframe is likely to lead to extreme financial hardship. There is no provision to extend recovery beyond a 9-month period.

Right to appeal

Schedule 3 of the Universal Credit, Personal Independence Payment, Jobseeker’s Allowance and Employment and Support Allowance (Decisions and Appeals) Regulations (Northern Ireland) 2016 states that there is no right to appeal a decision not to make a payment of account, although claimants may be able to appeal against the rate at which the advance payment is recovered.

Claimants who have requested an advance payment and who have had this request refused should instead make a formal complaint to the Department for Communities and should seek assistance from Housing Rights or another independent advice agency with this process.

Are advance payments sufficient to offset financial hardship?

The UK government has pointed to the availability of advance payments as a built-in way of mitigating against any financial hardship caused by delays in processing Universal Credit claims, but at this point many people in Great Britain continue to struggle when transitioning onto this new system. Some have complained that the availability of advances has, until now, been kept fairly quiet. Locally, the Department for Communities has regularly highlighted the availability of advances at Universal Credit information sessions.

Citizens Advice has queried if a system of advances, rather than hardship payments, traps a claimant into debt from the outset of a Universal Credit claim. DWP statistics published in September 2017 show that 11% of new Universal Credit claimants did not receive any of their payment on time and 19% of new claims did not get their full payment on time. The reasons for late payments vary between problems with verification, either caused by administrative issues or claimant’s failure to provide the necessary documentation, and the need to amend claims due to changes in circumstances, further delaying payment.