DWP's response to the coronavirus outbreak Contents

2Universal Credit

The impact of Coronavirus on Universal Credit claims

8.The increase in Universal Credit claims since lockdown began is nothing less than unprecedented. At 26 May, the number of new claims since 16 March stood at 2.9 million.1 This is almost double the total number of Universal Credit claimants before the pandemic (1.5 million).2 At its busiest, DWP received 110,000 new claims on a single day, compared to an average of 55,000 new claims per week before the outbreak.

9.The chart below, produced by the Resolution Foundation using DWP Management Information, shows the sharp increase in the number of Universal Credit claims since 16 March. By mid-May, the number of claims being processed each day was about twice the daily average for 2019. Not all of these claims will have resulted in a UC payment: in answer to a Parliamentary Question, the Department explained that, of the 800,000 claims processed between 16 and 29 March, 16% had a nil award due to earnings and a further 16% were either withdrawn by the claimant or closed due to ineligibility.3

Figure 1: Daily new claims to Universal Credit, rolling weekly average: GB, 2020

Figure 1: Daily new claims to Universal Credit, rolling weekly average: GB, 2020

Source: Resolution Foundation, “The Safety Net in Action? Universal Credit’s role in the crisis and the recovery”, 27 May 2020

10.Claims for other working age benefits have also increased over this period: the Secretary of State told the House on 4 May that the Department had received over 250,000 claims for Jobseekers’ Allowance and over 20,000 claims for Employment and Support Allowance.4

DWP’s response to the volume of new claims

11.DWP responded quickly to this surge by redeploying thousands of existing staff to work on processing new claims. The Secretary of State said on 4 May that around 8,000 DWP staff had been deployed to front-line posts, with a further 500 joining them from other government departments.5 As a result of these efforts, Will Quince, Minister for Welfare Delivery, told us that 93 per cent of claimants who applied during the week of 16 March would receive their first payment on time6—an improvement on the pre-lockdown average of 85 per cent.7

12.We asked organisations who support claimants whether there had been any decline in the accuracy of Universal Credit awards—that is, whether new claimants are being paid the correct amount. Minesh Patel of Citizens Advice told us that, at this relatively early stage, it was not possible to say what proportion of people needed to challenge their award, but that they would continue to monitor the situation closely.8

13.We ran a survey between 8 and 15 April to find out about people’s experiences of the benefits system. The people who took part were self-selecting, so their experiences cannot be taken to be representative. We were struck, however, by the positive comments we received about the performance of DWP’s front line staff. One person told us:

The assistant who called me was seconded into the position and was extremely helpful and demonstrated the utmost empathy. Overall, the staff drafted in to work out of their comfort zones are doing an amazing job and a credit to themselves and the overall team spirit.

Another said:

I must say that I was amazed at how easy the process was and how very friendly and polite the lady was that called me. Given the huge pressures [the Department] must be under, I was surprised it has been so quick. 100% thanks to all [the] team.

14.These views were echoed by Feeding Britain, an anti-hunger charity, which told us that:

Staff at the Department for Work and Pensions (DWP) deserve the utmost credit and support for the speed and urgency of their immediate response to the COVID-19 pandemic. Their administration of more than 1 million new claims for Universal Credit, within such a short period of time, represents a mammoth task.9

Experiences of the application and identity verification process

15.Several people who responded to our survey, however, said that their experiences of the application process itself had been less positive. Many had experienced long queue times when contacting the Department by phone. In response to the high volume of inbound calls, on 9 April DWP removed the requirement for claimants to phone the Department and instructed claimants to wait for the Department to call them instead.10

16.Other applicants reported delays during the next stage of the process: verifying their identity through the Government’s Verify service, which is used across government for identity verification purposes and uses third-party providers to verify claimants’ identities. Criticism of the verification process did not begin with the Covid-19 outbreak; a National Audit Office (NAO) investigation into Verify, published in March 2019, found that it was ‘difficult to conclude’ that continuing the programme was ‘sufficiently justified’.11 DWP’s own research from June 2018 found that the process of verifying their identity online was perceived by claimants to be ‘one of the most difficult steps in the registration process’, with almost half (48 per cent) of those who used Verify saying that they found the process difficult.12

17.DWP subsequently announced that claimants could use their existing Government Gateway accounts to verify their identity.13 In written evidence, Child Poverty Action Group (CPAG) recommended introducing further improvements to the verification process: a more sophisticated queuing system, less stringent requirements for documentary evidence and, in the long term, making the verification process more ‘light touch’.14

The online application process

18.The Department’s announcement of 19 March that claimants would no longer need to attend a Jobcentre, coupled with Jobcentre closures, has meant that many people have needed to make their UC application online. The Children’s Society expressed concern that some people, particularly those with limited digital skills, faced barriers to applying online:

[ … ] It has been exceptionally difficult for anyone without adequate digital literacy or digital access (i.e. no internet at home or mobile phone with data, including some in rural areas with poor broadband connections), or where offline services have been required (for example, for ID verification). We were told that Job Centre closures/reduced services are exacerbating these difficulties in accessing the service.15

19.They also highlighted that the lack of face-to-face support and difficulties accessing the Universal Credit helpline because of the high volume of calls has adversely affected claimant groups who may require additional support, such as people with limited English, people with learning disabilities, people with hearing impairments and those belonging to other vulnerable groups—including prison leavers and people with complex mental health needs.16

20.Our predecessor Committee looked at people’s experiences of the online application process in its report on Universal Credit: support for disabled people, published in November 2018. Research carried out by DWP found that over half (54 per cent) of people who made their Universal Credit claim online found the process difficult. People with long term health conditions were more likely to require assistance, while 52 per cent of disabled people who managed to register online said that they needed assistance.17 In response to that Committee’s report, the Government referred to the introduction of ‘Universal Support: Help to Claim Universal Credit’ (now known as Help to Claim), a free support service delivered by Citizens Advice, and said that the service would provide support to people who needed assistance in making and managing their claim:

The Universal Support; Help to Claim Universal Credit service will provide assistance to those requiring additional support to make and manage their UC claim. It is being designed specifically with vulnerable customers in mind and provides funding to Citizens Advice to help people make their Universal Credit claim, and to help manage their Universal Credit payment.18

21.DWP should be commended for its rapid response to an unprecedented increase in claims. In particular, the extraordinary work of its front-line staff, whose efforts have led to most claimants receiving their first payment on time, deserves the highest praise.

22.The surge of new claims following lockdown highlighted some of the existing flaws in the identity verification process. The changes DWP has made to the application process in response to the outbreak—particularly allowing the use of Government Gateway accounts for identity verification—are very welcome. We remain concerned, however, that the online application process continues to be difficult to navigate for people who lack digital literacy, especially people in vulnerable groups. The Department should continue to allow claimants to use their Government Gateway accounts to verify their identity once the lockdown has ended. It should also use this as an opportunity to reflect on what other changes to the process are needed, with a particular focus on the needs of people who are vulnerable and digitally excluded.

23.We welcome the fact that 93 per cent of new claimants from 16 March received their first payment on time: a substantial improvement on the previous average. That means, however, that around 7 per cent of new claimants—more than 200,000 people—are still receiving their first payment late. The challenge for DWP now is to improve on these high standards while not compromising on the accuracy of payments. The large numbers of staff deployed to front line posts has undoubtedly contributed to the improvements in timeliness, but this will not be sustainable beyond the short term. The Department should now set out how it intends to improve on, or at the very least maintain, these standards of payment timeliness in ‘normal’ times, with fewer staff in front line roles.

Advance payments

24.After submitting a claim for Universal Credit, applicants must wait at least five weeks before receiving their first payment. New Universal Credit claimants have the option of requesting an Advance payment equivalent to their monthly award, which must be paid back over a period of 12 months. Total monthly deductions are currently capped at 30 per cent of the standard allowance: this applies to almost all deductions, including repayments of benefit overpayments and rent arrears, not just Advance repayments. In the March 2020 Budget the Chancellor announced that, from October 2021, the repayment period would be extended to 24 months and the maximum deduction rate reduced to 25 per cent.

Numbers of Advance payments

25.At 26 May, the Department had issued nearly 1.2 million Advance payments since 16 March, representing around 40 per cent of the total number of new claims.19 Peter Schofield, Permanent Secretary at DWP, told us that before the outbreak around 60 per cent of new claimants requested an Advance.20 The reasons for the decrease are not yet known for certain. While acknowledging that the Department would need to look closely at the data, Will Quince, Minister for Welfare Delivery, suggested that it could be due to the profile of the new claimant cohort:

We are going to have to look at the analytics and data on this. [ … ] But what we anticipate is that the cohort of people coming on to Universal Credit is likely to be somewhat different from what we would see in ordinary normal circumstances, for example more self-employed, more people coming on with savings, people who are still awaiting salary or money coming in from previous employment, people who don’t necessarily need an advance in the way that people have done previously.21

26.While Advances are intended to address the waiting period before claimants receive their first payment, they must be paid back through deductions from future payments. Our forthcoming inquiry into Universal Credit: the wait for a first payment will look at the impact of the wait and Advance repayments in more detail. We have already heard evidence, however, that repayment of Advances can lead to further hardship. Emma Revie, Chief Executive of the Trussell Trust, told us:

We are aware that there are advance loans that people can take, but we are seeing a lower uptake of those advance loans as we are going into the coronavirus. We know from our previous research that the reason for that is that people are anxious about the loan repayments and going into debt, and are not sure what that will mean—hardship now, weathering the five week wait without any kind of income, or hardship later, having taken the advance now but knowing that it will lead to their having insufficient money going forward.22

27.The Department last published a full impact assessment of Universal Credit in 2012. No formal impact assessment has ever been produced on Advance repayments. In its report into the Welfare Safety Net, published in July 2019, our predecessor Committee recommended that the Department produce an up to date impact assessment of Universal Credit, reflecting the changes that have come into force since 2012.23 The Government did not accept this recommendation, arguing that the Department considers the impact of all changes to Universal Credit on an iterative basis. It said that:

In line with the public sector equality duty, we regularly consider equality impacts on all major changes to Universal Credit. This process is iterative, so we continue to consider them as we develop our approach in response to evaluation from our test and learn approach.24

Suspension of Advance repayments

28.In response to a Parliamentary Question, DWP published data showing that almost 1.2 million people receiving Universal Credit faced deductions from their monthly award in August 2019 (compared to September 2018, where the number stood at just under 460,000).25 This figure includes repayments of Advances and all other deductions, including third party deductions, but does not include sanctions or fraud penalties.

29.On 3 April, DWP announced that some existing repayments, including of benefit overpayments and Social Fund loans, would be suspended for three months.26 When asked why the Department had not suspended Advance repayments as well, Will Quince told us that it had focused its resources on processing new claims, and that suspending Advance repayments would involve diverting that resource away from delivering payments. Neil Couling, Senior Responsible Owner for Universal Credit, explained that suspending repayments would be difficult to achieve for operational reasons:

If you wanted to block defer the recovery of advances, that is all automated in the system. We would have to strip out the automation and put human beings on to doing those deferrals, which would affect our ability to pay claims because those human beings are currently working their absolute socks off getting those 93%-plus claims paid.27

30.MedConfidential, an organisation with experience of government information systems which has worked with the Child Poverty Action Group, disputed DWP’s claim that suspending repayments would require the system to be de-automated:

As independent technical experts, with many years’ experience investigating and holding to account large-scale information systems across government, we would expect that the “continually evolving”, “agile” Universal Credit system could automate such changes, likely with a single deployment. We know, for example, that NHS and GDS digital services have deployed hundreds of times in recent weeks–including building entirely new services.28

31.The Trussell Trust is one of several organisations who have called on the Government to suspend Advance repayments temporarily. Emma Revie also told us that:

A key ask that we make of the Government, particularly during this time of crisis, is to relieve that additional stress and, for three months, to suspend deductions of those advance payments, so that people can take those loans when they need them without fear of what that might mean for their income in the following three months, and so that they do not have to go to food banks.29

32.A coalition of charities including the Trussell Trust, Child Poverty Action Group, Joseph Rowntree Foundation, Turn2Us and StepChange issued a call, on 1 May, for the introduction of a ‘Coronavirus Emergency Income Support Scheme’ to address hardship caused by the outbreak. The scheme’s proposals include suspending repayment of Advances:

Extending the suspension of benefit deductions to cover advance payments. This would ensure no current claimants lose out during this time due to previously taken advances, while new claimants can take out an advance payment to access money urgently while they wait for their first Universal Credit payment without fear of hardship down the line–and could be achieved through existing mechanisms.30

33.The baked-in wait for a first payment in Universal Credit means that some claimants take out an Advance in order to make ends meet, which must then be paid back within 12 months. These repayments are creating additional hardship at a time when many households are already struggling to get by. We commend DWP’s decision to suspend repayments of other debts, which recognises that these repayments were causing undue hardship. But this will not offer much comfort to the thousands of Universal Credit claimants who are still facing substantial deductions every month to repay Advances. We recommend that DWP assesses and reports on the impact of its temporary suspension of some debt repayments, including the total value of deductions that have been suspended and the impact on households who have been affected by this decision.

34.We were astonished to hear that the Universal Credit system has been built in a way that makes it all but impossible for repayments of Advances to be suspended in a crisis situation. We recommend that DWP review the Advances system and consider what changes are needed to make it more flexible, so that in times of crisis like these it can react quickly to meet claimants’ needs.

Moving from legacy benefits to Universal Credit: unintended consequences

35.In an announcement on 20 March, the Chancellor acknowledged that, despite the government’s efforts to reduce job losses, some people had already lost their jobs because of coronavirus—and that further job losses were possible. He said that he could not promise that no one would face hardship in the weeks ahead, and that the Government would “act to protect you if the worst happens”. He then announced the increase to the standard rate of Universal Credit described in paragraph 50. He also said that he was “strengthening the safety net for self-employed people” by suspending the minimum income floor in Universal Credit, and that this meant that “every self-employed person can now access, in full, Universal Credit at a rate equivalent to Statutory Sick Pay for employees.”31 On the Government’s web pages with advice for people looking for advice if they’ve lost their job, the first sentence under “Financial support” reads:

Apply online for Universal Credit to get financial support if you’ve lost your job.32

36.For most people, that is sound advice. But for others, it has had profound and unintended consequences. If someone is moving to Universal Credit from existing (“legacy”) benefits, making a claim for Universal Credit automatically stops their claim for those benefits. In response to our survey into people’s experiences of the benefits system during the coronavirus outbreak, some people told us that they had not realised that making a claim meant that they would stop receiving tax credits, and that they would not have applied for Universal Credit if they had known. In some cases, they were not entitled to Universal Credit in any case—for example, because they had more than £16,000 in savings. They then found that they could not return to tax credits, and were left with no support from the benefits system at all.

37.Members of the Committee have heard from constituents who have found themselves in this situation. Our Chair described one case in a letter to the Minister for Welfare Delivery, Will Quince, as follows:

In response to the Government’s offer of support where income has been reduced during the crisis, one of my constituents applied for Universal Credit. She did not know she would lose her Working Tax Credit. She and her husband have just over £16,000 in savings, so they now receive no support at all. It is a severe case of benefit mis-selling.33

Another member of the Committee, Sir Desmond Swayne, has heard from a constituent who had simply enquired about making a claim for Universal Credit, without ever actually making a claim. They nevertheless found that their legacy benefits had been stopped. Other Members have also asked Ministers to address similar cases in their constituencies.34

38.In response to a question from the Chair on 23 April about whether claimants in these situations could return to their existing benefits, the Minister for Welfare Delivery said that there were no plans to allow this to happen. He told us:

In many cases people, because of the changes, will be better off under UC in any event, but there are no plans for people to be able to go back on to legacy benefits. In fact, the plan is to phase out legacy benefits and for Universal Credit to be the principal benefit that we operate as a Department. I am sorry to say that the plan is not to do so.35

On 4 May, however, the Secretary of State told the House that she was “looking very carefully” at whether changes could be made for cases in which “people, not realising some of the eligibility rules, have then made the application and are no longer effectively going to receive working tax credits.”36

39.Ministers told us, in a letter of 15 May, that the Department was still “looking carefully” at this issue. They explained that:

Information for potential claimants—and particularly for people who are currently receiving Tax Credits—has been updated on gov.uk on the Understanding UC website and through our social media channels.37

The Universal Credit page on gov.uk now reads:

You cannot claim Universal Credit and tax credits at the same time. If you get tax credits, they will stop when you or your partner applies for Universal Credit.38

40.Our predecessor Committee heard evidence last year, in the course of its inquiry into “natural migration” to Universal Credit, about the wider problems caused by the so-called “lobster pot”: the principle that, once someone has made a claim for Universal Credit, they cannot return to their existing benefits. This principle is enshrined in law, leaving DWP staff with no discretion. As Neil Couling, Senior Responsible Owner for Universal Credit, explained to our predecessor Committee: “The Regulations do not allow you to move people where a claim for universal credit was made properly.”39

41.It has been possible, in exceptional circumstances, for claimants to be returned to their existing benefits after a Universal Credit claim was made in their name—but this was in cases of fraud. Neil Couling explained to our predecessor Committee that that was possible in such cases “because the claim was not properly made, you can revert the claimant back to their legacy benefit entitlement.”40 In other cases, when people had been misadvised by DWP staff to move to Universal Credit and had lost income as a result, the Department has paid compensation, rather than returning them to legacy benefits.41

42.Our predecessor Committee expressed concern that the possible risks of making a new claim for Universal Credit—not least the possibility of an irreversible loss of income—were not made clear enough to people claiming legacy benefits. It described this as “irresponsible at best”.42 It recommended that the Department’s communications should state explicitly that some people may lose out financially as a result of a move to UC” and that “this information should be added to the UC claim homepage”. We have not received the Government’s response to the recommendations in that report, which were made in July 2019.

Entitlement to transitional protection

43.There is a further difficulty for people moving from legacy benefits to Universal Credit, which arises from the different treatment of people who move to Universal Credit in different ways. For people already claiming benefits, there are two ways of moving to Universal Credit: “natural migration” and “managed migration”. Natural migration happens when someone has a change in circumstances which means that they need to make a new claim for a legacy benefit. They then find that they have to make a claim for Universal Credit instead. “Managed migration” is the process by which the Department plans to move legacy benefit claimants to Universal Credit, even when their circumstances have not changed.

44.A pilot of managed migration began in Harrogate in July 2019; by January 2020, 80 people were participating in the pilot and 13 had moved to Universal Credit.43 The Government had planned for managed migration to begin at scale in July 2020. In February 2020, it estimated that the process would be complete by September 2024.44 When managed migration is running at scale, DWP expects to move 100,000 households to Universal Credit each month. It seems likely that the Department’s plans for managed migration will have been delayed further by the coronavirus outbreak.

45.People who move to Universal Credit through “managed migration” are entitled to transitional protection if their UC entitlement is lower than their legacy benefits. This is intended to ensure that their income will not fall when they first move to UC. People who move to Universal Credit because their circumstances change (“natural migration”) are not, however, entitled to transitional protection. The Department says that this is because their circumstances have changed, and their previous benefit entitlement is no longer relevant. This means in practice that anyone making a new claim for Universal Credit now will lose any entitlement to the transitional protection that they would have received if they had waited to move via managed migration.

46.Some legacy benefit claimants are currently unable to move to UC by “natural” migration. On 7 June 2018, the Department announced the introduction of the “Severe Disability Gateway”. The Gateway was introduced after the Department faced legal challenges from two disabled men, who had lost disability premium payments after moving to UC, and were not entitled to transitional protection. The Gateway prevents disabled people who are in receipt of the Severe Disability Premium from moving to UC, and in doing so losing their premiums. The Department plans to introduce a measure of transitional protection for these claimants, and to compensate claimants who moved before the Gateway was introduced.

47.Making a new Universal Credit claim has worked well for huge numbers of people since the start of the coronavirus outbreak. But it has been detrimental for some people moving from legacy benefits, who have inadvertently left themselves worse off as a result—and, in some cases, with no support from the benefits system at all. Encouraged by Government guidance, they made claims for Universal Credit in good faith, only to find themselves trapped in a bureaucratic lobster pot, unable to return to their pre-existing benefits. Worse still, they are also stripped of any entitlement they might have had to transitional protection if they had moved to Universal Credit in future.

48.We cannot believe that the Government intended that any of this should happen, and the Secretary of State’s commitment to solving this problem is welcome. But it is now nearly two months since MPs began raising this issue on behalf of their constituents, and the time for action is long overdue.

49.We recommend that the Government urgently take steps to return to their pre-existing benefits, or the equivalent financial position, anyone who has inadvertently left themselves worse off by making a claim for Universal Credit during the coronavirus outbreak. It should also restore their entitlement to transitional protection for any future move to Universal Credit by managed migration.

1 Department for Work and Pensions, ‘Universal Credit declarations (claims) and advances: management information’, updated 2 June 2020

2 Q67

3 PQ 41056

4 HC Deb, 4 May 2020, col 421 [Commons Chamber]

5 Ibid.

6 Q70

8 Q133

9 Feeding Britain (SWP0026)

10 Department for Work and Pensions press release, ‘Don’t call us - we’ll call you’, 9 April 2020

11 National Audit Office, ‘Investigation into Verify, March 2019, p 9

12 Department for Work and Pensions, ‘Universal Credit Full Service Survey’, June 2018, p 36

13 Department for Work and Pensions press release, ‘Universal Credit claimants to verify identity through Government Gateway’, 16 April 2020

14 Child Poverty Action Group (SWP0064)

15 The Children’s Society (SWP0050)

16 Ibid.

17 Work and Pensions Committee, Twenty-First Report of Session 201719, Universal Credit: support for disabled people, HC 1770, para 50

21 Q72

22 Q136

23 Work and Pensions Committee, Twenty-Eighth Report of Session 201719, Welfare Safety Net, HC 1539, para 102

24 Government Response to the Work and Pensions Committee’s report into the Welfare Safety Net, p9

25 PQ 25694 and 25696. The data includes figures for England, Scotland and Wales only.

26 Department for Work and Pensions press release, ‘Recovery of benefit overpayment suspended’, 3 April 2020

27 Q78

28 MedConfidential (SWP0082)

29 Q136

32 Department for Work and Pensions, ‘Coronavirus (COVID-19): what to do if you were employed and have lost your job’, accessed 5 June 2020

33 Letter from the Chair to Will Quince, Minister for Welfare Delivery, 30 April 2020

34 See, for example, HC Deb, 11 May 2020, col 4 [Commons Chamber] HC Deb, 4 May 2020, col 430 [Commons Chamber]

36 HC Deb, 4 May 2020, col 430–431 [Commons Chamber]

37 Letter from DWP Ministers to the Chair, 15 May 2020

38 Gov.uk, ‘Universal Credit’, accessed 29 May 2020

39 Oral evidence taken on 24 July 2019, HC (2017–19) 1790, Q165

40 Ibid, Q164

41 Work and Pensions Committee, Twenty-Seventh Report of Session 2017–19, Universal Credit: natural migration, para 81

42 Work and Pensions Committee, Twenty-Seventh Report of Session 2017–19, Universal Credit: natural migration, para 74

43 HC Deb, 27 January 2020, col 521 [Commons Chamber]

44 HC Deb, 4 February 2020, col 175 [commons Chamber]

Published: 22 June 2020