Peabody Trust says 42-day wait means 60,000 households, with over 40,000 children, will receive no income until after festive season

Claimants signing on to universal credit from this week will not receive any income before Christmas because of the existing 42-day wait for payment, putting the finances of tens of thousands of households at risk, according to a housing association.

The Peabody Trust estimates that nationally more than 60,000 households, containing more than 40,000 children, will make new universal credit claims in the six weeks before Christmas, and so will not receive any income in the run-up to the festive season.

The trust calculated that even if the wait were to be cut to four weeks, 27,000 children across 40,000 households would still be affected. Reducing the wait to two weeks would leave an estimated 20,000 households, containing 14,000 children, at risk of having no cash over Christmas.

MPs and peers will debate universal credit on Thursday afternoon, amid speculation that ministers were planning to cave in to mounting pressure and cut the current minimum six-week waiting time to four weeks.

Quick guide What is universal credit and what are the problems? Show Hide What is universal credit? Universal credit (UC) is the supposed flagship reform of the benefits system, rolling together six benefits into one, online-only system. The theoretical aim, for which there was general support across the political spectrum, was to simplify the system and increase the incentives for people to move off benefits into work. About 2 million people are currently in receipt of UC. More than 6 million will be on the benefit by the time it is fully rolled out. How long has it been around? The project was legislated for in 2011 under the auspices of its most vocal champion, Conservative MP Iain Duncan Smith. The plan was to roll it out by 2017. However, a series of management failures, expensive IT blunders and design faults mean it is now seven years behind schedule, and rollout will not be complete until 2024. The government admitted that the delay was caused in part by claimants being too scared to sign up to the new benefit. What is the biggest problem? The original design set out a minimum 42-day wait for a first payment to claimants when they moved to UC (in practice this is often up to 60 days). After sustained pressure, the government announced in the autumn 2017 budget that the wait would be reduced to 35 days from February 2018. This will partially mitigate the impact on many claimants of having no income for six weeks. The wait has led to rent arrears and evictions, hunger (food banks in UC areas report notable increases in referrals), use of expensive credit and mental distress. Ministers have expanded the availability of hardship loans (now repayable over a year) to help new claimants while they wait for payment. Housing benefit will now continue for an extra two weeks after the start of a UC claim. However, critics say the five-week wait is still too long and want it reduced to two or three weeks. Are there other problems? Plenty. Multibillion-pound cuts to work allowances imposed by the former chancellor George Osborne mean UC is far less generous than originally envisaged. According to the Resolution Foundation thinktank, about 2.5m low-income working households will be more than £1,000 a year worse off when they move to UC, reducing work incentives.

Landlords are worried that the level of rent arrears accrued by tenants on UC could lead to a rise in evictions. It's also not very user-friendly: claimants complain the system is complex, unreliable and difficult to manage, particularly if you have no internet access.

And there is concern that UC cannot deliver key promises: a critical study found it does not deliver savings, cannot prove it gets more people into work, and has plunged vulnerable claimants into hardship.

The lengthy wait for a first payment has been blamed for spiralling rent arrears and rising food bank referrals. More than half of new low-income claimants are used to budgeting on a weekly or fortnightly basis, and few have savings.

Although ministers have signalled that they are prepared to shorten the waiting time to four weeks, campaigners have warned this may still be too long for many households, and that further cuts to the waiting time should be considered.

On Wednesday it emerged that a private landlord in Grimsby had formally warned tenants on universal credit that it would move to evict them if they were unable to meet rent payments. New claimants in north-east Lincolnshire will move to universal credit on 13 December.



Ministers have insisted that the impact of the wait for a first payment is mitigated by the availability of advance payments. However, a recent MPs’ report concluded that the loans offered only limited help because claimants could borrow only the equivalent of up to two weeks’ universal credit income to tide them over the 42-day wait.

The full universal credit service was rolled out on Wednesday in Birkenhead, the Merseyside constituency of the Labour MP Frank Field. He has warned that the local Wirral food bank plans to stockpile an extra 15 tonnes of food to cope with expected demand for emergency parcels over the next few weeks.

The new system was also scheduled to roll out out on Wednesday in Newport, Basildon and Peterborough. Over the next few weeks they will be followed by north Ayrshire, Brighton, Gloucester, Oxfordshire, Birmingham, Manchester, Reading, Wolverhampton and Swansea.