Addressing concerns raised over universal credit in recent months in his Budget statement, the Chancellor said the wait for the initial payment will be cut by one week – to five – after criticism it is causing hardship for claimants.
The main anxiety among MPs and charities has been the six-week wait claimants have been forced to endure before receiving their first payment under the new regime, after transferring from the legacy benefits system.
Speaking in the Commons, Mr Hammond said he had earmarked a £1.5bn package to cut to waiting period for payments and make it easier for claimants to receive an advance.
He said he would remove the seven-day waiting period so entitlement for universal credit starts on the day of the claim, adding that any household needing an advance can access a full month’s payment within five days of applying.
Mr Hammond said the repayment period for these advances – effectively a loan for struggling claimants – will also be extended from six to 12 months.
In a further move, any new universal credit claimant in receipt of housing benefit will continue to receive the support for the first fortnight when transferring to the new system.
He added that David Gauke, the Work and Pensions Secretary, will be outlining further details on changes to the flagship welfare policy in the Commons on Thursday.
Responding to the U-turn, the Conservative MP Johnny Mercer, who had previously raised concerns over the rollout of universal credit, said: “Huge news. The model compassionate Conservative party get things like universal credit right. The biggest poverty-fighting tool we have.”
But the changes were criticised by Labour after it emerged the modifications to the programme will not be in place until the new year. The reduced wait time on the initial payment, for example, will not be in place until February 2018.
Labour’s Shadow Work and Pensions Secretary, Debbie Abrahams, said: “The Government has no idea of the reality faced by the tens of thousands of families with children who are facing a Christmas with no support thanks to the Government’s failure to pause and fix universal credit.”
“Instead of tinkering at the edges, with only one pound put back into the programme for every ten that was cut, the Chancellor must also take action to prevent thousands more from being forced to visit food banks this Christmas”.
Shadow Cabinet minister Andrew Gwynne described the announcement as a “screeching U-turn”, adding: “Nice of Hammond to acknowledge this was only done because Jeremy Corbyn and Labour pushed the issue up the political agenda.”
Citizens Advice, a charity that has raised many concerns over the rollout of the programme in recent months, said the changes unveiled by the Chancellor “are a welcome step” in the fixing the problems with universal credit.
The charity’s chief executive Gillian Guy added: “These changes should make a significant difference to the millions of people who will be claiming universal credit by the time it’s fully implemented. We’ll continue to keep a close eye on the roll-out of universal credit and make sure they do.
“The next step will be to make changes to work incentives, so that no one is left worse off under universal credit than they would be under previous benefits.”
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