88.Universal Credit (UC) is the Government’s flagship welfare policy, which merges six separate benefits into one, paid as a single, monthly payment in arrears. Rollout of Universal Credit to new claimants and those on legacy benefits (the benefits UC replaces) with a relevant change of circumstances took place, as with the rest of the UK, on an area-by-area basis between 27 September 2017 and 5 December 2018.
89.Universal Credit claimants in Northern Ireland have additional “flexibilities” that are not available to UC claimants in the rest of the UK. These are that:
a)Universal Credit is normally paid once a fortnight in Northern Ireland, compared to once a month in England and Wales;
b)housing costs for people on Universal Credit in Northern Ireland are normally paid directly to the landlord, whereas in England and Wales people normally receive their full Universal Credit payment and must arrange to pay their own rent; and
c)joint claimants can request that payment is split between the two members of the couple, whereas in the rest of the UK, couples can only have their UC payment be split between them in exceptional circumstances, when recommended by Work Coaches.
90.Multiple witnesses told us that the “five week wait”—the minimum delay between having a Universal Credit application accepted and receiving the first payment—was a major flaw with the design of Universal Credit. Alan, a Universal Credit claimant, told us that Universal Credit should not require claimants to take on debt in the form of advance payments:
The thing about the loans, I think that is a big flaw in Universal Credit. Why should you have to wait five weeks to go on a benefit? That is going to put you in debt. I am paying £47 a month because of getting the advance payments. I don’t understand: why can’t you just go from one benefit to the other? Why is there a five-week period?
91.Community Advice Antrim and Newtownabbey provided the following case study of the effect of the five week wait on claimants:
92.The five week wait has also been linked to an increase in tenants arrears in Northern Ireland:
The five week wait before claimants receive their first UC payment has already caused a significant rise in arrears, despite (as of May 2019) only 13% of the total population in NI due to migrate to UC having done so already. These arrears have been well documented in the SRS [Social Rented Sector]; in 2018/19 the average arrears for NIHE tenants on UC were £700.05, compared to an average of £191.82 for Housing Benefit claimants.
Box 3: Case study: effect of the five week wait
[A] client who is a single parent with one child, a housing association tenant and getting housing benefit … was paying the shortfall on their rent by direct debit; they were also paying extra as they were in rent arrears. She claimed Universal Credit and was advised she would have to wait 5 weeks for her first payment. She could not afford the shortfall, repayment for arrears as well as living expenses. The client rang the housing association to explain she would be cancelling the direct debit until her first payment of UC went in. She was advised by the housing association that if she cancelled the direct debit they would start legal proceedings. The client has had no other option but to keep the direct debit and pay what she can of her rent. She said she had to “choose between shelter or food and heating”. She was then relying on family members for support to feed herself and her child.
93.Professor Eileen Evason argued that if the Department can pay an advance, there is no reason why this could not be a first payment:
[…] it never crossed my mind that people would be waiting, five, six, seven, eight or nine weeks for the first payment. Certainly, I think the point was very well made earlier on. If they can make an advance I cannot understand why that cannot be converted into a first payment.
94.The waiting period for Universal Credit is a problem which affects the whole of the UK, not just Northern Ireland. This is an area the Work and Pensions Committee has previously reported on earlier this year, in its report, Universal Credit: natural migration. The Committee concluded that the five-week wait was “one of UC’s fundamental design flaws” and recommended that:
the Department should look at practical options to eliminate the five-week wait. This could, for example, involve the Department making advance payments to claimants non-repayable. It could adjust for any differences in the estimate on which a claimant’s advance is calculated and the calculation of their final award through additions or deductions to the claimant’s future UC payments.
The Committee also recommended that, whilst the five week wait remains, that the Government bring forward the “run-ons” of legacy benefits (two weeks’ additional payment of the benefits UC replaces when a claimant is moving to Universal Credit) to Autumn 2019.
95.We therefore welcome the commitment from the Secretary of State for Work and Pensions to look at ways of reducing the five week wait, by drawing on evidence from the operation of run-ons of legacy benefits and the managed migration pilot. In oral evidence on Wednesday 24 July, the Secretary of State told the Work and Pensions Committee:
The Department and I are keen to see the evidence of what works from the changes that previous Secretaries of State have made. But I am mindful that there are lots of other proposals, some of which have come from yourselves and some of which have come from think-tanks, about how to get money into people’s hands earlier, and I would be surprised if a new Prime Minister did not want to take a look at those.
96.Despite the Government reducing the overall waiting period for Universal Credit from six weeks to five, the waiting period is still too long, creating financial difficulties for claimants and encouraging them to take on debt. This is not a problem specific to Northern Ireland: it is a flaw with the design of Universal Credit. It is welcome that the Secretary of State for Work and Pensions recognises these problems and wants to ensure that claimants receive their first payment as soon as possible. The Work and Pensions Committee will be monitoring how the Department delivers on this commitment.
97.Universal Credit claimants in Northern Ireland receive their payments fortnightly by default, rather than monthly (as is the case in England and Wales), although claimants can still opt to receive monthly payments. The Permanent Secretary for the Department for Communities, in correspondence with the Chair of the Work and Pensions Committee, stated that the “overwhelming majority” of claimants in Northern Ireland receive fortnightly payments. Fortnightly payment is triggered by default whenever a UC claim is made with a Northern Ireland postcode.
98.Despite the fact that UC is paid fortnightly, claimants in Northern Ireland still receive a monthly statement, which the Department says can “lead to confusion among claimants”. The Department for Communities has said that the Department for Work and Pensions has plans to address this problem, but confirmed subsequently that this would simply involve monthly statements explaining that payment was made fortnightly.
99.Professor Evason told us that “the situation would be much worse” without fortnightly payments. Kevin Higgins, Head of Policy at Advice NI, agreed, but added that fortnightly payments combined with the five week wait mean that claimants have to wait longer to get their full UC entitlement after the assessment period:
The one flaw I would say with fortnightly payments is you still have to wait until the end of the first assessment period. Then you get half of what you are due, and you get the remaining half halfway into your second assessment period. It is that flaw that you wait and wait and wait, and you have saved and borrowed and all the rest of it and you get only half of what maybe you were expecting.
100.We heard from Sabrina, a Universal Credit claimant who told us that receiving fortnightly payments made it easier for her to budget:
Chair: Sabrina, do you value receiving your UC every fortnight rather than getting it once a month? Because that is different in Northern Ireland to the mainland.
Sabrina: If you are good at budgeting, a fortnight is handier.
Chair: You think that is much easier for you to manage than if you only got it once a month?
Sabrina: Yes, it is.
101.Written evidence from the Joseph Rowntree Foundation, Ruth Patrick (University of York) and Mark Simpson (Ulster University) argued that the Government’s rationale for a single monthly payment under Universal Credit was flawed, since it may not reflect the pattern of earned income for low income households:
The Government has argued that this change would ‘close the gap between being out of work and having a job, so it is not such a major shift for people leaving benefits’ while giving claimants the right and responsibility to manage their own income across a whole month, in common with most employees. However, it is far from clear that monthly payment is the norm for low paid workers.
The Department’s own figures show that 50% of all households earning below £10,000 are paid on a cycle other than monthly. Data from the Annual Survey of Hours and Earnings shows that, across the labour market as a whole, a quarter of jobs do not have a monthly pay period—with 13% of jobs having a weekly pay period.
102.The Secretary of State for Work and Pensions has already piloted more frequent payment of Universal Credit and is evaluating the results. However, Northern Ireland already offers a practical example of higher payment frequency from which the Department for Work and Pensions can learn.
103.Fortnightly payment of Universal Credit in Northern Ireland has worked well, making it easier for low-income households to budget. However, claimants receiving fortnightly payments continue to receive monthly statements, which inevitably causes confusion and potential anxiety. We welcome that DWP and the Department for Communities recognise this problem. We doubt, however, that the Department for Communities’ proposal to include on monthly statements an explanation that payments will be made fortnightly will prove adequate. Fortnightly statements would be considerably clearer for claimants. We recommend that Universal Credit claimants in Northern Ireland receiving fortnightly payments also receive fortnightly statements.
104.The advantages of fortnightly payment of Universal Credit in Northern Ireland would apply equally to claimants in England and Wales. Since the fortnightly payment pattern is applied automatically in Northern Ireland by the Universal Credit IT system, we can see no reason why DWP cannot replicate it in other areas of the UK.
106.In Northern Ireland, the housing costs element of Universal Credit is paid directly to landlords by default. Direct payment to landlords can only be made by request in the rest of the UK.
107.The evidence we heard suggests that direct payment to landlords generally works well for claimants in Northern Ireland. It has, however, not been without problems. While direct payment to social landlords is automated, payments to landlords in the private rented sector have to be processed manually. The Permanent Secretary at the Department for Communities told the Chair of the Work and Pensions Committee in correspondence that this is a “particularly labour intensive area which given its manual nature, can be more prone to error. Accordingly, additional staff resources are being deployed on processing and checking this flexibility, pending the automation of this process”.
108.We asked the Northern Ireland Audit Office whether this extent of manual processing represented value for money. Denver Lynn, Director at the NIAO, suggested that this was primarily a policy decision:
The Department is best placed to answer this question, but in my understanding, one of the benefits of the late implementation of policy is that you can learn from elsewhere. One of the aspects that was learnt by the Department for Communities was the increase in debt that claimants would fall into when monies were being paid to them to pay to their landlord. That was the reason for the intervention on that particular point, that the default position, certainly in the social housing sector, was that monies would be paid direct to the landlord. That would take the individual out of that and they would not fall into arrears because of that same point.
The NIAO did, however, acknowledge that there were additional costs incurred by introducing manual flexibilities into a system designed primarily to pay claimants rather than landlords.
109.The Department for Communities told us that they expected the planned automations of UC flexibilities in Northern Ireland—including batch payment to social landlords and automated payment to private rented sector landlords—to be implemented within the next 18 months:
We have a number of IT asks of the Department for Work and Pensions around our flexibilities and it has been gradually working with us on delivery on those. We are confident now that over the next probably 18 months we will have all of our IT requirements delivered.
110.We also heard concerns about the build-up of residual arrears, where housing benefit or the housing element of Universal Credit does not cover the full cost of an individual’s rent, and technical arrears, which occur because the payment schedules and payments due do not match.
111.David Sales, Director of the Universal Credit Programme at the Department for Communities told us that the Department is working with landlords to try to address the build-up of tenant arrears. The Department is telling landlords manually when a claimant might build up residual arrears so that they can intervene at an early stage:
What we are trying to do is get a better information flow … We are trying to work with social rented landlords to tell them the amount of money that they are getting in respect of a particular claimant as early in that journey as possible so that they have the potential to intervene. They would understand that there may be residual arrears starting to build from month 1 [ … ]
The Department is also telling landlords about their payment schedules to ensure that they do not pursue a claimant for technical arrears:
Rather than pursue a claimant for technical arrears, they understand that there is a payment coming from the Department, it is just with the payment cycle. There is work that we are doing clerically now. There is also work that we are doing with the Department for Work and Pensions to automate that process so that the system would do that automatically.
112.We heard that direct payment to landlords can also mean that if claimants move house during their Universal Credit assessment period (the successive month-long periods where income and circumstances are taken into account to calculate the next UC payment in arrears), their new landlord will receive the Housing Element for the full assessment period. The Department for Communities said this was “probably what we would call an unintended consequence of one of the Northern Ireland flexibilities”. It is, however, unclear why this happens if the Department receives the necessary information from claimants about their change in landlord. Anne McCleary, Director of Social Security Policy and Legislation at the Department for Communities said that they are working with tenants and landlords to address this problem:
We are looking at that… We are looking at it to work with the landlords and with the tenants to see what we can do.
113.We welcome the commitment of the Department for Communities to address the problem of residual and technical rent arrears that build up as a result of migration to Universal Credit and the payment flexibilities in Northern Ireland. We recommend that the Department for Communities set out in detail, in response to this report, the work it is currently doing to address the build-up of tenant arrears, and its plans for any future work in this area.
114.The delay in automating the UC flexibilities in Northern Ireland—such as direct payments to private landlords and batch payments to social landlords—has required labour intensive processes that inevitably result in higher levels of error. The Department for Communities expect the automations to be completed within 18 months. It is important that there is no further delay. We recommend that the Department for Work and Pensions work with the Department for Communities to ensure that the planned automations of UC flexibilities in Northern Ireland are in place within 18 months.
115.In Northern Ireland, a couple making a joint Universal Credit claim can have the payment ‘split’ between them on request. In the rest of the UK, couples can request that their UC payment be split between them as an Alternative Payment Arrangement (APA), but this can only be recommended by Work Coaches in exceptional circumstances.
116.Universal Credit payments are only split if claimants request this. Split payments were originally planned to be offered with no default option, meaning that the lead claimant would have to choose at the point of application whether they wanted it paid into a single account, a joint account, or split between two accounts.
117.The Women’s Resource and Development Agency told us that the “no default” position was not possible because of the online application process for UC:
The key barrier to being able to fully implement the commitment to a ‘no default’ approach for all claimants is the IT system as it currently only has the capability to enter one bank account when a claimant is filling in the online application.
118.Take-up of UC split payments in Northern Ireland has been extremely low, with only two Universal Credit claims (and therefore four individuals) making use of them. We asked the Department for Communities why they thought this was. The Permanent Secretary offered a number of possible explanations, including that the majority of claimants are single—with only 12% of claimants in families—and that the Department may not have advertised this option widely or clearly enough to claimants.
119.The Director of the Universal Credit Programme at the Department for Communities, David Sales, suggested that wider take-up of split payments would make a limited difference in practice or result in female partners in couples receiving smaller payments:
Having seen that there was only four out of probably 62,000 [claimants receiving split payments] in our work with organisations in Northern Ireland, we did a sample of some of our claimants to try to understand what was going on. We sampled 100 of the 12% and what we discovered was that for 73% of that 100 the payment was going to the female in that instance, so a split payment would actually disadvantage the female. It is a very complex area and a very sensitive area.
He conceded, however, that if claimants “could specify from the outset anonymously that they want a split payment”—the “no default” model—that would “enable the greatest amount of choice to claimants”.
120.The current DWP systems used to pay Universal Credit cannot make split payments automatically. A manual process is therefore used in Northern Ireland, although the Department for Communities told us that “further automation of these processes is scheduled within DWP plans to improve system functionality”. The Cliff Edge NI Coalition suggested that the manual processing of UC flexibilities in Northern Ireland makes the process less clear for claimants, which may also account for the low take-up.
121.The Women’s Resource and Development Agency told us in written evidence that low take-up may be because split payments are not routinely offered to claimants:
WRDA believes that DfC [the Department for Communities] have not made any effort to publicise this policy to claimants. […] We remain concerned that claimants might be receiving conflicting advice from JBO [Jobs and Benefit Office] staff or simply not presented with the full range of payment options at the time of setting up a claim.
122.Professor Evason offered an alternative explanation; namely, that under the current arrangements, those who would want split payments would be in the hardest position to claim them:
Nobody suggests that people do not know about them. It is that the person who is likely to need them would be the woman who has an alcoholic husband, the woman who is being subjected to domestic violence, the woman who is really in a very parlous position. She is not going to go down to the local office or whatever and say, “I want half the money” or more.
123.The Work and Pensions Committee recommended in its report on Universal Credit and domestic abuse that DWP support the Scottish Government to pilot split payments in Scotland, and use the evaluation to see if there is a case for introducing split payments by default in the rest of the UK. The Department for Work and Pensions and the Scottish Government have recently agreed on a potential method of splitting Universal Credit payments, in line with the Scottish Government’s original proposals, and are now beginning to work on policy design and implementation.
124.The Work and Pensions Committee also recommended that “where claimants have dependent children, the entire UC payment should be made to the main carer by default.” In a speech in January 2019, the Secretary of State for Work and Pensions subsequently committed to ensuring that UC payments to households with children go to the main carer:
[…] I am committed to ensuring that household payments go directly to the main carer—which is usually, but not always, the woman. For those couples currently claiming UC, around 60% of payments already go to the woman’s bank account. However, I am looking at what more we can do to enable the main carer to receive the UC payment, and we will begin to make those changes later this year.
In an answer to a written question by Baroness Lister, the Department confirmed, however, that it would only “encourage” UC payments going to the main carer in joint claims.
125.In its July 2019 report, Welfare safety net, the Work and Pensions Committee concluded that the Government’s commitment only to “encourage” the payment going to the main carer “means it is unlikely to have the wholesale impact the Secretary of State intends”, adding that “couples where abuse or coercive control is a problem are unlikely to respond to ‘encouragement’”. The Committee urged the Government to pay UC to the main carer by default.
126.The experience of Northern Ireland shows that offering split payments of Universal Credit on request is not enough to encourage and enable uptake by those who most need it. The Scottish Government’s planned implementation of UC split payments is an opportunity for the Department for Work and Pensions and the Department for Communities to learn what approach would work best.
127.We recommend that the Department for Work and Pensions and the Department for Communities evaluate the implementation of split payments in Scotland to assess what model would work best in the rest of the UK, including Northern Ireland. In the meantime, the Department for Communities should work with claimant support organisations to advertise the option to receive split payments more widely.
128.We recommend that, in response to this report, the Department for Work and Pensions set out what further work they have done to ensure that Universal Credit payments go to the main carer in households with children.
101 Housing Rights ()
103 Work and Pensions Committee, Universal Credit: natural migration, (HC 1884), para 55
104 Work and Pensions Committee, Universal Credit: natural migration, (HC 1884), para 56
105 , Q147 (Amber Rudd)
113 Joseph Rowntree Foundation, Mark Simpson (Ulster University), Ruth Patrick (University of York) (joint submission) ()
114 National Audit Office (2017) , p70
115 Office for National Statistics (2017)
116 Hansard HC Deb , Col 1147
122 Housing Rights (), Connswater Homes (), North Belfast Advice Partnership (); ,
125 Housing Rights ()
128 Women’s Regional Consortium ()
129 Women’s Resource and Development Agency ()
130 Joseph Rowntree Foundation, Mark Simpson (Ulster University), Ruth Patrick (University of York) (joint submission) ()
134 Department for Communities ()
135 Cliff Edge NI Coalition ()
136 Women’s Resource and Development Agency ()
138 Work and Pensions Committee, , Seventeenth Report of Session 2017–19 (HC 1166)
140 Work and Pensions Committee, , Seventeenth Report of Session 2017–19 (HC 1166)
Published: 9 September 2019