Some claimants were waiting around 11 weeks for full Universal Credit payment even before numbers spiralled because of the coronavirus crisis, according to an official report.
The National Audit Office (NAO) said the Department for Work and Pensions (DWP) had “significantly” improved the proportion of claims paid on time, from 55% in January 2017 to 90% in February 2020.
But as the number of people claiming Universal Credit (UC) has grown, the number of people paid late has also increased, from 113,000 in 2017 to 312,000 in 2019.
New claimants who were paid late last year faced average delays of three weeks in addition to the usual five-week wait for payment.
Around 6% of households (105,000 new claims) waited around 11 weeks or more for full payment, said an NAO report.
Stephen Timms, chairman of the Work and Pensions select committee, said the report highlighted worrying signs of increased stress and absence from work among staff, while hundreds of thousands of people were still being paid late each year, with vulnerable people particularly likely to struggle with their claim.
The NAO said the DWP has demonstrated a clear focus on paying more people on time and has made improvements to its systems to address problems that were blocking large numbers of payments.
But the report said the DWP needed to better understand and address the needs of people with more complex claims, who may be more likely to struggle to make and maintain a claim, despite the changes to improve payment timeliness.
The report said: “The DWP has reduced the cost of administering each claim, but it is still not certain that Universal Credit will be cheaper to administer than the benefits it has replaced.
“The overall administrative cost per Universal Credit claim reduced from £699 in June 2018 to £301 in February 2020.
“This is still more than the £173 per claim that the DWP forecast in its business case that Universal Credit would cost in 2024-25 after it is fully rolled out.”
The report said the department has made poor progress in reducing fraud and error, finding that over £1 in £10 paid through UC is incorrect.
The DWP estimates that £1.7 billion (9.4%) of UC payments were overpaid in 2019-20, the highest recorded rate of overpayments for any benefit other than Tax Credits, said the report.
Even before the Covid-19 pandemic, the DWP had identified that its staff were under pressure, with the number of cases each of its case managers handles increasing from 154 at March 2018 to 573 at February 2020, said the NAO.
“The DWP told the NAO that many staff were already spending more time than expected to ensure claimants were paid on time.
“It also had concerns around the volume of telephone calls case managers are receiving and increased absence levels,” said the report.
The NAO reported that the Covid-19 pandemic has led to “unprecedented” numbers of new UC claims.
Gareth Davies, the head of the NAO, said: “The DWP deserves credit for improving its processes so that 90% of claimants are now getting their first Universal Credit payment on time.
“However, it is concerning that vulnerable people and those with complex claims may struggle with their Universal Credit claim and face financial difficulties.
“The DWP needs to improve its understanding of vulnerable claimants and how best to support them to ensure that no one is slipping through the net.
“This is only going to become more important as the economic upheaval caused by Covid-19 continues.”
Mr Timms added: “This hard-hitting report confirms the Select Committee’s concern that the five week wait for the first payment causes financial hardship and debt.
“It provides further evidence that the initial planning assumptions for Universal Credit were naive. We now know UC will cost an extra £1.4 billion to the public purse.
“It will take more than twice as long to roll out as originally planned. Far from reducing fraud and error, Universal Credit is driving historic record high levels.”
TUC general secretary Frances O’Grady said: “We need a strong safety net for when people fall on hard times, especially as unemployment rises during this crisis, but this report shows that the five week wait for Universal Credit is pushing families into debt.
“The government must end the five week wait now. It is causing needless stress and hardship.”
Alison Garnham, chief executive of the Child Poverty Action Group, said: “It’s worrying that hundreds of thousands of hard-up people are getting late Universal Credit payments, with a small percentage waiting a full 11 weeks.
“Understandably, people on a low income are often reluctant to take an advance payment to get them through the wait because it’s a loan and so it’s just more debt to pay off down the line.”
Iain Porter, of the Joseph Rowntree Foundation, said: “While it is encouraging that significantly more claimants are receiving their first Universal Credit payment on time, it still does not justify the minimum five-week wait.
“There was nothing compassionate or just about this policy prior to the pandemic and as the levels of unemployment grow, we urgently need to get support to people when they need it.”
A DWP spokesman said: “Universal Credit is delivering in these unprecedented times, with more than 2.5 million new claims processed since mid-March and over one million advances paid to those in urgent need within days. Nobody has to wait five weeks for payment.
“As the report shows, significant improvement has been made in the proportion of Universal Credit claimants receiving their first payment on time and in full, currently around 90%.
“We’ve also increased the standard allowance by up to £1,040 a year, as part of a package of welfare measures worth over £6.5 billion to support the most vulnerable.”
Jonathan Reynolds, shadow work and pensions secretary, said: “This report confirms Universal Credit is fundamentally flawed. To be losing one pound in every 10 to fraud and error, representing £1.7 billion, is indicative of serious problems within the system and hardly provides the value for money Universal Credit was promised to deliver.
“Not only is it costing as much as legacy benefits, but the report confirms that the introduction of the five-week wait is exacerbating financial difficulties for people already in distressed circumstances.
“The high take-up of advance loans shows just how tough those first few weeks are for most people, many of whom will have existing debts.”