14 August 2014

Among the changes made by the Tory Libdem Welfare Reform Act was the requirement of people who become unemployed to wait for five and a half weeks before receiving any unemployment benefit – a month statutory wait and then a week for administration. Currently they wait two weeks.

The government says that this wait matches the monthly pay cycle of many in work and thus prepares people for their eventual transition to work. This makes sense in theory – and saves public money in administration – but what of it in real life?

How are people supposed to live without money? You work hard, pull your weight, contribute to our national prosperity – and then when you lose your job, through no fault of your own, you have to wait for five weeks for any supporting money.

Research by Step Change (Life on the edge) shows that around “13 million people do not have enough savings to keep up with essentials for a month if their income dropped by a quarter”. Of course, modest wages make saving for rainy days very difficult. It is difficult for people when they lose their job and we should not compound those difficulties by leaving people without financial support for five weeks. People should be able to focus on getting back in to work, not worrying unnecessarily about money. We should not be planning to put people in debt and poverty.

The government received serious advice about an unacceptable likely consequence of the five-weeks rule. For example, the Social Market Foundation gave telling evidence to the works and pensions select committee about the government’s theory and plans. It said that “some households will be unable to cope and will run out of money before the end of the month”.

The issue was raised by Labour (Kate Green in Hansard at second reading 9 March 2011 column 1012; and in Public Bill Committee 29 March 2011, page 180) but the regulations (Universal Credit Regulations 2013, statutory instrument 376) bringing the payment cycle into force stuck with five weeks.

Now the TUC has found that 300 000 people will be affected by the long wait.

I understand that welfare provisions should be regularly examined and changed from time to time to make them responsive to contemporary circumstances and to encourage and support people into work. However, this five-week rule, unless mitigated by exemptions, seems to fly in the face of compelling arguments of its likely adverse effects. That suggests that Tory Libdem ideology rather than realism is the driver.


Universal credit: the problem of delay in benefit payments by Carl PACKMAN