DWP policy of excluding universal credit claimants awaiting national insurance numbers from New Claim Advances found unlawful

The Court of Appeal has ruled in favour of two Universal Credit (“UC”) claimants who brought judicial reviews against the DWP after waiting months for their first payments of UC due to them not having a National Insurance Number (“NINo”) at the point they claimed the benefit, despite DWP having verified their identity and determined they were eligible for UC. 

The Court of Appeal today issued a judgment that found that the DWP’s policy of never giving New Claim Advances to new UC claimants who are in need and facing hardship, purely because they have not yet been issued with a NINO, is unlawful.

UC is calculated monthly in arrears over a monthly assessment period running from the date of claim. Claimants usually receive their first payment of the benefit within a week after the end of their first assessment period, meaning there is a built in 5-week wait from the point of claiming to when any UC is received.

The 5-week wait causes significant problems for people who are already in need at the point they make a claim for UC. To mitigate the problems caused by the 5-week wait, the government relies on its system of ‘New Claim Advances’, which are available if claimants are in financial hardship while they wait for their first UC payment. The amounts of these advances vary but can be up to 100% of the claimant’s estimated first UC payment.

Most people already have a NINo when they claim UC, and so can apply for a New Claim Advance. But DWP’s position prior to this judgment was that it was never possible for a New Claim Advance to be paid to claimants who are waiting for a NINo to be issued to them, even when the DWP has already verified their identity and checked that they meet all the usual conditions of entitlement for UC. 

The Court of Appeal held the advance payments scheme sets out that in a case where a claimant’s claim has not yet been determined and the claimant is in need, the Secretary of State will consider whether it appears likely that the conditions of entitlement to UC are met. This must occur regardless of whether a claimant has a NINo or not.

Claire Hall, Head of Strategic Litigation at Child Poverty Action Group said:

New Claim Advances are the only thing stopping some UC claimants from spending 5 weeks in real hardship while they wait for their first payment. It is vital that all claimants can access one—especially considering that the DWP can verify a claimant’s identity and can assess whether they are likely to be entitled to UC. This is an important win and must be implemented by the DWP urgently. The government must also fundamentally change the nature of New Claim Advances to ensure that those receiving them are not later pushed into debt as the government recoups those payments through reducing monthly UC payments. Following this judgment the DWP must offer the option to apply for a New Claim Advance to all claimants, whether they have a NINo or not.

Notes to editors:

The cases are R (on the application of Ngoc Hong Thi Bui) v Secretary of State for Work and Pensions and R (on the application of Idowu Onakoya) v Secretary of State for Work and Pensions [2023] EWCA Civ 566. The judgment is here.

Ms Bui was represented by Child Poverty Action Group. Ms Onakoya was represented by Central England Law Centre. Both judicial reviews were transferred to the Upper Tribunal (Administrative Appeal Chamber) by the Administrative Court and were heard together by the Upper Tribunal. The appeals to the Court of Appeal were joined and were heard together by the Court of Appeal in March 2023.

Background on UC advances and deductions

Advances are not additional payments to what claimants would otherwise be entitled to, but instead are repayable amounts and are usually recovered from DWP through deductions from monthly UC payments. To recover New Claim Advances, DWP reduces the amount of UC people receive in subsequent months. 

Since April 2021, new advance payments can be repaid through monthly UC deductions over 24 months. Advances applied for prior to 12 April 2021 are repayable over 12 months. For people who move off UC before the balance of their advance has been repaid, DWP have powers to arrange deductions from wages via former claimants’ employers, or by asking an external debt collection agency to collect the money. 

The maximum rate of deductions for recovery of advance payments (as well as third party and other deductions) is currently set at 25% of a claimant’s UC standard allowance. Child Poverty Action Group recently called for the monthly rate of deductions from UC for government debt (including advances) to be reduced to 5% of a claimant’s UC standard allowance, with the total monthly rate (including third party deductions) reduced to 15%.

CPAG press office: 07816 909302.