Coronavirus: Nearly half a million people register universal credit claims after losing jobs

Nearly half a million people have registered universal credit claims after losing their jobs or seeing a drop in wages due to the coronavirus crisis, with more than 100,000 new claims processed in a single day.

Therese Coffey, the work and pensions secretary told MPs that 477,000 claims for the welfare benefit had gone into the system since last Monday, with 105,000 registered on Tuesday.

Economists said the figures showed the UK was “already in the midst of an unemployment crisis”.

The Department for Work and Pensions (DWP) has informed people who are ineligible for statutory sick pay, including the self-employed, they can apply for universal credit or employment support allowance (ESA).

New claimants have reported lengthy delays in the online system, with some being told there were tens of thousands of people ahead of them in the queue to have their identifies verified.

Speaking to the Work and Pensions Committee on Wednesday, Ms Coffey said the DWP was at an “unprecedented moment” in terms of people contacting the department seeking benefits, and that it was “very difficult” to devise one scheme to process what would likely amount to millions of new claimants.

In order to speed up the process, 1,500 staff have been redeployed to the frontline of universal credit, with a further 3,900 later this week and an ambition to have 10,000 redeployed in the coming weeks, according to the DWP’s permanent secretary, Peter Schofield, who sat alongside Ms Coffey.

But when asked by the committee whether claimants would experience delays in their applications being processed, he said he was unable to give that reassurance: “It’s still too early to know whether people are getting through in the time we would expect them to.”

Mr Schofield added: “I don’t know how the next stages in the journey will progress, but my intention is that because we’ve changed processes, we can get as many as those claims as we possibly can paid on time.

“The fact that 477,000 have made it through to that first stage, the online journey is holding up well.”

Despite the surge in cases and potential widespread delays in processing times, Ms Coffey said the controversial five-week waiting time for a first universal credit payment would remain because of the need to offer “fairness to the wider taxpayer”, as well as “technical challenges” in changing the software and processes involved.

She insisted that instead advance loans were the best way to deal with urgent cash problems, with some 77,000 of the 477,00 new claims having been given advances.

“The underlying principles of universal credit have not gone away. And by that I mean the design is supposed to be based on your general income, we need a month to assess what your likely income is going to be,” she said.

“But, as I keep reiterating the advances can be made to people pretty quickly. We will still be sticking with that advance. Technically it would be difficult to make the operational changes some people are asking for, whereas the advance system does work and works quickly.”

Data published by the DWP last year showed that £1 of every £10 in universal credit payments was deducted from claimants in order to pay off advances, which campaigners said was creating hardship for many low-income households.

Figures released by the Trussell Trust, the largest UK food bank provider, last year revealed demand for food banks increased dramatically in areas where families had been relying on the universal credit system the longest, which the charity said was mainly due to the five-week wait.

Asked by committee chairman Stephen Timms if she was considering changing advances into grants rather than loans, Ms Coffey said it had been looked at but was unlikely because of the cost.

Liberal Democrat Ed Davey called on the government to turn day-one universal credit loans into grants “immediately” and guarantee anyone who is laid off receives at least 20 days of full pay.

“A five week wait has always been too slow and frankly unacceptable. The coronavirus crisis is an unprecedented threat with millions of families facing financial hardship,” he said.

“With more and more people needing to apply to universal credit, we must ensure all who are eligible and need support are getting it – and quickly.”

Emma Revie, chief executive of the Trussel Trust, said it was “more important than ever” that ministers end the five-week wait for universal credit, adding: “As the outbreak develops, more people than ever could need this help – especially those who aren’t eligible for sick pay or have unstable jobs.

“While thousands of our incredible volunteers continue to help people unable to afford the basics, we would ask our government to take this essential step and end the five-week wait now. It’s five weeks too long.”

Responding to the figures, Karl Handscomb, senior economist at the Resolution Foundation, said: “The unprecedented surge in new universal credit claims shows that the UK is already in the midst of an unemployment crisis.

“The government was right to increase the generosity of the benefits system last week. It now needs to ensure the resources are there so that claims are processed quickly, and people receive support as soon as possible.”