Universal Credit – The Truth About Advances
I just want to start by saying that the response since my first article has been overwhelming. Organisations, journalists and claimants have shared it and I’ve heard from people about their experiences with Universal Credit, and it has been humbling.
It’s hard to know what the right thing to do is in these situations and I have been extremely grateful for the support I’ve received.
I hope that these articles are helpful and maybe in some small way make a difference.
Read my previous post Universal Credit from a DWP Agent’s Perspective – The First Assessment Period for more information about the process of applying for Universal Credit and the first month of the claim.
How do advances work?
Advances are one of the more well-covered aspects of Universal Credit, supposedly a way of helping people get by before their first full payment of the benefit.
There are several types of advances, with the most common ones being those paid in the first assessment period. I’ll explain the distinctions between the advances shortly, but in theory it works like this.
Someone makes a claim for Universal Credit and their first payment date will be in roughly five weeks.
If they need money before then, they can request an advance. They specify how much they need, agree a repayment plan, and within two working days the money will be paid into their account.
However, as is common on Universal Credit, things are seldom so simple.
What types of advances are there?
There are four types of advances.
- New Claim Advance
- Benefit Transfer Advance
- Change of Circumstances Advance
- Budgeting Advance
A New Claim Advance is for someone who has not been on another income-based benefit within the last month. This is the most common type of advance.
Benefit Transfer Advances are for claimants who have moved from another benefit directly to Universal Credit. Those who were on ESA or Jobseekers Allowance would claim this type of advance.
The distinction between these two advances is foggy now. Previously a New Claim Advance had to be paid back within 6 months while a Benefit Transfer Advance could be paid back in 12 months. Claimants also had to explain what they needed the advance for and demonstrate a need for a New Claim Advance, whereas this wasn’t the case with a Benefit Transfer Advance.
However all advances can now be paid back over up to 12 months, and the process for establishing need is somewhat relaxed, so there’s little difference between these two options.
That said, agents will often still put up a fight for advance requests. The culture of catching people out is strong in the DWP, and can have a big impact on claimants.
A Change of Circumstances Advance is available to any claimant who reports a change of circumstance that will increase their award of Universal Credit.
In theory, this is for situations like the birth of a new child. A claimant has a child. Their Universal Credit will now be higher than previously; however, their payment date is in 3 weeks. So they can request an advance in the meantime.
This is seldom explained to people fully, however, and telephony agents often have to explain to someone that although, yes, they have been evicted for rent arrears and are now homeless and must pay for accommodation for the night, this is actually going to lead to a decrease in their Universal Credit award and as such no advance is available. (Their Universal Credit will decrease because of course, if they are now homeless, there is no more housing element to pay.)
A Budgeting Advance is primarily to help people get back into work, though after six months of receiving Universal Credit claimants can request them for one-off domestic expenses. Things like furniture, clothing, kitchen appliances, etc.
In several of my tweets, the article with the Guardian, and my previous post on this blog, I’ve repeatedly referred to Universal Credit as being “underdeveloped” and I can confidently say the Budgeting Advance is an incredible example of this.
For one thing, budgeting advances cannot be for normal expenses such as rent, bills, food, etc. If someone calls and requests an advance for this, the agent will typically decline it and then make notes on the account so that future agents know not to issue the advance if the claimant changes the reason for the advance to one of the allowable expenses.
Budgeting Advances are there to cover immediate expenses that will help people into work. This does not include job interviews, for which some support may be available at the Jobcentre, only for actual offers of work.
A common example of where a Budgeting Advance is issued is where someone has received a job offer, but they must pay for their own equipment such as safety equipment, boots, and so on. If they do not get the equipment, the job offer is likely to be withdrawn.
The trouble with Budgeting Advances
Budgeting advances must be a minimum of £100.
The vast majority of work-related Budgeting Advance requests come from people who have applied for a job, had an interview, and have now been offered a position but need help with transport costs.
“I start work on Monday, but the job is on the other side of town, and I have no money for the train/bus fare.”
They are typically asking for £10 or £20 for help with this, maybe £50 if they need enough for the week or month.
Unfortunately, that’s not enough for a budgeting advance, and so no support will be given by the service centre. The claimant may be referred to the Jobcentre to discuss the Flexible Support Fund, but an appointment for this may not be available for several weeks, and there is no guarantee the claimant will be seen if they simply walk into the Jobcentre.
So to summarise, £150 worth of boots and tools can be issued immediately over the phone with no questions asked, but £10 for train fare will require an appointment at the Jobcentre, potentially a 3-week wait, and the claimant may need to provide receipts and bank statements to show they are unable to meet the expense themselves.
What is the Flexible Support Fund?
Unfortunately, as I did not work in a Jobcentre, I can’t give too many details about how the Flexible Support Fund itself works, but it’s there to support people with short-term costs related to finding work. One common use for the fund is to purchase interview clothes for example.
My understanding is that it varies from Jobcentre to Jobcentre in terms of how easy or hard it is to get and how much is given, but again I have no direct experience with it other than booking appointments at the Jobcentre for claimants to request it when an advance is unavailable.
When will I get the advance?
Advances are typically paid as a standard bank transfer, meaning they take two business days. However, claimants can request a same-day payment. They may need to explain why they need it, and it will be at the discretion of the agent whether they put it through, but agents are trained not to offer the same-day payments until they are asked.
How much can I request?
Up until some time last year, the process was that agents could not tell claimants how much of an advance they were entitled to.
Claimants would have to offer a figure of how much they needed and the agent would then either process the advance for that amount or say, “That’s too much, we can only offer £XYZ.”
This changed however, and now all agents should tell claimants the maximum amount they can request, though this does not always happen either because agents are not aware of the change or because they refuse due to the culture of being over-vigilant.
This amount is calculated based on the circumstances entered on the claim as well as other details that the system picks up on. So for example, a family with 2 children in which someone is caring for a person with health conditions will be entitled to a higher advance than a single person living with their parents.
How do I pay it back?
The advance repayments will be deducted from your Universal Credit automatically each month based on what you agreed.
The total amount that can be deducted from a Universal Credit award including advances is 40% of a claimant’s standard allowance in general.
I say in general because there are certain deductions that may bring the total above that figure, for example certain fines or third-party deductions.
So although you may choose to pay your advance back at £50, you may find that there are other deductions on your Universal Credit that make this unmanageable.
This is one of the most insidious parts of Universal Credit.
No one can tell you how much your payment will be. Agents may estimate and offer ball park figures, but because of the myriad of circumstances that Universal Credit takes into account, even small details that are missed can affect the payment hugely.
What that means is when claimants request an advance, they are doing so blindly, with no real definitive answer to how much they will be paid in five weeks.
So effectively it is a gamble. A claimant may need to pay their rent, but without knowing how much Universal Credit they will receive, they don’t know how much they should borrow and agree to pay back.
When their payment arrives, if it is lower than they were led to believe it would be at the Jobcentre, they may call Universal Credit to try and reduce the repayment.
Advance repayments cannot be reduced.
Claimants can request that their advance be deferred. This means they can pause repayments for up to three months. But agents will simply tell claimants that because it’s the amount they agreed to repay, it cannot be changed.
Of course, you can pay an advance off early, but you cannot reduce the repayment amount.
So now if a claimant is receiving less money than they expected, they may go into significant arrears with their rent or bills or other expenses because Universal Credit won’t amend the repayments.
Asking someone to take an advance and guarantee that their circumstances won’t change for a year is a big deal.
If someone loses their home, develops a health condition, starts caring for someone, becomes unemployed, the advance repayments will not change. They will be expected to keep the commitment they made.
The only way to change how much you repay is to officially claim insolvency and provide the evidence at the Jobcentre showing that the advances are included in that.
Can’t or won’t?
There are two possibilities here, both rather damning to Universal Credit.
One is that the system cannot reduce the repayments, which would seem like a pretty important function for a benefit that is the primary income for many vulnerable claimants.
This suggests that the Department is in theory willing to reduce these payments but is trapped by limited software that will not allow it.
This would show that the Department was short-sighted, rushed Universal Credit, and has mistakenly put thousands of claimants into hardship because they pushed out unfinished software.
Or the Department is unwilling to reduce these payments.
This one is a lot more likely. Other deductions can be reduced. If other deductions are being taken from a Universal Credit award, then claimants can call the DWP’s debt management team to establish an affordability agreement.
Much like with any private company, they will have a discussion about what is acceptable to pay back, what the claimant is able to repay, and how this will affect the claim going forward.
But this cannot be done with advances. Meaning claimants do not have the option of prioritising their rent repayments, their council tax, or their heating over their advance repayments.
This option implies that the DWP is knowingly putting people into hardship out of stubbornness and a refusal to accept that unexpected circumstances can affect claimants’ ability to repay these debts.
As always, please note that this information was up-to-date at the point I left Universal Credit on 20 July 2018 and is based on the assumption that no major changes have taken place since then. I do my best to fact-check myself where possible, but with limited access to current DWP guidance this can be difficult.
Feelfree to follow me on Twitter @BayardTarpley and let me know if there’s anything you think I should write about in regarding to Universal Credit from an agent perspective.
Thanks again for reading.