Early Warning System eBulletin - June 2022
The original version of the e-Bulletin was edited in July 2022 to remove a comment on the maximum rate of universal credit deductions. The Department for Work and Pensions, as a matter of policy, does not usually make deductions from a UC award that exceed 25 per cent of the standard allowance. It’s understood that this policy maximum does include deductions for advances. However, the DWP has argued that deductions for advances are legally different from other deductions – and this has consequences for rates of recovery
This month, we have had a few cases about universal credit advances.
Call for evidence in June: we want to hear about UC mistakes to do with income. Has your client had to challenge Real Time Information about their earnings? Or has their income from other benefits caused issues on UC? Tell us about your cases by completing an online form or emailing the Early Warning System.
How universal credit advances work
The DWP sees advances as 'payments on account': you get some of your future UC entitlement in advance to relieve short-term financial pressure. Advances are repayable to the DWP over a set period, usually through deductions from an ongoing UC award.
Most advisers will have come across the kind of advance that you can apply for at the start of a new UC claim. There is also an advance that you can apply for mid-claim when you have had a change of circumstances, like a job loss. Separately, there is a 'budgeting advance', which is what it sounds like: a payment to help with certain living expenses.
The amount you get depends on the type of advance, and repayment periods vary too – more on this below.
Advances are generally requested by journal, phone, or in the Jobcentre. If your client is turned down for an advance, s/he can ask the DWP to reconsider, but there is no right of appeal. In some cases it might be possible to challenge the decision through judicial review (see our Judicial Review Project's template letters about advances).
The beginning of managed migration to UC and the rising cost of essentials mean that advisers might face more questions about advances in the coming months.
See Advance Payments in our Welfare Benefits and Tax Credits Handbook for more information on how advances work. Most of the legal detail is in the Social Security (Payments on Account of Benefit) Regulations 2013 and the DWP's guidance is here.
Affording an advance: deductions
UC advances sometimes look like the only option. They can get claimants through the 'five-week wait', for example, or over the childcare costs hurdle of a new job. They are interest-free and seen by some claimants as an affordable way of borrowing money.
But when it comes to repaying an advance, affordability is a serious concern. Deductions are set without considering how much UC will be left for a claimant to live on, with the total of the advance simply being divided over the standard repayment term (usually 12 or 24 months).
A woman with health conditions makes a new UC claim. While she is waiting for a work capability assessment, her only income is the standard allowance of UC. After deductions, she only has £243 to live on each month.
A single claimant with mental health problems re-claims UC after a period in work. Deductions start being made immediately towards advances taken out on his old claim. Because of this and the date of his last wage, he is left with no UC (beyond housing costs) for weeks after claiming. He cannot pay his bills and lives on food parcels. His MP helps him to complain, and the complaint is upheld, but the deductions are not rescheduled.
You can ask for advance deductions to be delayed for a short time (generally one to three months) but this is not a long-term solution.
Unfortunately, the government has rejected recommendations that it makes certain advances non-repayable.
CPAG is looking more widely at how reforms to the UC deductions system could help people with the rising cost of living, by increasing their incomes. We published this briefing in May. Please tell us about any cases in which your clients have deductions and are struggling financially, even where you think these are 'run of the mill' cases.
Advances and financial abuse
Liable for a mystery debt
Earlier in the year, we heard about a woman who separated from her abusive partner only to discover that he had taken out two advances, worth nearly £1,000, on their joint UC claim. Despite knowing nothing about this, she was now being asked by the DWP to pay the money back.
When an advance is taken out on a joint claim the DWP can recover it from either or both claimants, no matter who received the money. There don't seem to be any specific safety measures in place to stop one claimant taking out an advance without the other's consent.
In a case like this, you might help your client to ask the DWP to waive recovery of the advance. Our last e-Bulletin had more information about making waiver requests. You might also advise your client to make a complaint to the DWP.
NINO delays following a split
In May, we heard about a new UC claimant who was refused an advance because she did not yet have a national insurance number. The claimant had just left an abusive, financially controlling partner and had no income or savings at all, so the advance was urgently needed.
It's common that an application for a NINO will hold up the processing and payment of a UC claim, although it shouldn't. CPAG has brought a test case on this issue, and produced two template letters for advisers (JR105 and JR106). If you are advising on a case like this, please contact our Judicial Review Project: no only can they help you to adapt and use the templates, but it is possible they will be able to raise your case directly with DWP Legal.
The Survivors Welfare Advice Project at CPAG ended this month, but we will soon be publishing a number of factsheets for those advising survivors of domestic abuse. Email us if you would like to be notified when the new resources go online
Do you have something to tell us?
Hearing about your cases has a profound impact on our work.
Some of the topics we are looking out for include:
- 'Reasonable adjustments' not being made – Anything from a client struggling with their online UC account, to a phone appointment being refused, to inappropriate work-related requirements.
- Earnings and other benefit income on UC – Has your client had to challenge Real Time Information about their earnings? Or has their income from other benefits caused issues on UC?
- The £20 cut – We know it is being deeply felt by all UC claimants, as the costs of living rise. To make persuasive arguments to government, we need specific examples of the effects it is having.
Submit a case online or email the Early Warning System to tell us more. We can also be reached by phone on 0207 812 5226.
If you know an individual who would like to contact us directly about their own case, please let them know about our contact form for non-advisers.
Do you need CPAG's advice?
Advice by telephone
020 7812 5231 Monday to Friday, 10am-12 and 2pm-4pm
Universal credit advice by email outside London
Universal credit advice by email in London
020 7812 5221 Wednesday, 10am-12pm and 2pm-4pm
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