The chancellor has announced a one-week cut in the waiting time for universal credit as part of a £1.5bn package to smooth the transition to the new benefit system.
The government has been under pressure to reduce the waiting time for new claimants from six weeks in response to evidence that households were getting into hardship as they waited for payment and rent arrears had risen sharply.
Philip Hammond today announced the removal of the seven-day waiting period applied at the beginning of a benefit claim, meaning entitlement to universal credit will begin on the day the claim is made.
But he said reducing the week’s delay at the end of the four week assessment period would “mean compromising the principle of payments being made on the same day of the month”. He said this was a ”key feature of the system which is very important for claimants in managing their budgets”.
On changes to the advances system, the chancellor said households can receive a full month’s payment within five days of applying, with the option to apply online.
He also announced that the government will extend the repayment period for advances from six months to 12 months and that any new universal credit claimant in receipt of housing benefit at the time of the claim will continue to receive it for two weeks.
Of the £1.5bn, the cost of the one-week reduction is £895m up to 2022-23, with the bulk of the remainder spent on the two week continuation of housing benefit.
Mr Hammond said: “The switch to Universal Credit is a long overdue and necessary reform, replacing Labour’s broken system that discouraged people from working more than 16 hours a week and trapped 1.4 million on out-of-work benefits for nearly a decade.”
He added that universal credit “delivers a modern welfare system, where work always pays and people are supported to earn.”
The chancellor said that work and pensions secretary David Gauke would provide further details on changes in the commons on Thursday.
Shadow communities Andrew Gwynne on Twitter accused the government of a “screeching u-turn” on universal credit.