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Nearly one million people claim Universal Credit as Covid-19 money shock felt

The Financial Conduct Authority have announced a temporary loan and credit card payment freeze while Brits feel the pandemic squeeze

Almost one million people have applied for Universal Credit in a fortnight as the financial impact of the coronavirus shutdown begins to take effect.

There have been 950,000 successful applications for Universal Credit since the Government advised people to work from home where possible on March 16, according to the Department of Work and Pensions.

That is a rapid and unprecedented influx of people relying on the controversial benefits system, which has been beset by problems since its introduction.

The number of people with no option but to turn to Universal Credit is almost ten times the rate normally expected when 100,000 claims would be processed in a fortnight.

“With such a huge increase in claims there are pressures on our services, but the system is standing up well to these and our dedicated staff are working flat out to get people the support they need,” said a DWP spokesperson.

“We’re taking urgent action to boost capacity — we’ve moved 10,000 existing staff to the help on the front line and we’re recruiting more.”

And a Resolution Foundation report, released yesterday, agreed that the Universal Credit system does not appear to have “fallen over” in the face of enormous demand, despite reports of flooded phone lines.

With more claims still to come as the impact of the coronavirus continues to be felt, the think tank has called on the DWP to ensure advance payments are made in timely fashion to stop families being hit by the five-week wait for a first payment. They also recommend payments on these advance loans are paused for six months as should other deductions like rent arrears and overpayments.

The Resolution Foundation want Universal Credit to be extended to middle-income households and for more to be done to make people aware of what they are entitled to. The think tank is also urging regular updates on the number of claims “like we are seeing with the public health response” to track how the system is keeping up with demand.

Meanwhile, the Financial Conduct Authority announced this morning that firms are expected to offer a temporary payment freeze on loans and credit cards where consumers have been affected by the coronavirus. That freeze should last for three months with the measure coming in on April 9.

The FCA are also proposing a cap on arranged overdraft charges of £500 with zero interest to limit the damage of people dipping into the red as well as ensuring that anyone using these temporary measures will not see their credit rating affected.

These proposals will help people “weather the storm” says Christopher Woolard, the FCA’s interim chief executive.

Sarah-Jayne Clifton, director of Jubilee Debt Campaign, called the measures “very welcome” while they were also greeted favourably by debt charity StepChange.

Their head of policy Peter Tutton said: “We have already seen a number of firms introducing temporary payment holidays and forbearance, but to know that as a bare minimum people would effectively have a three-month freeze period would provide enormous peace of mind to many.”

StepChange released their annual statistics yearbook this week and it showed the enormous challenge that the coronavirus will bring to stop people from falling into problem debt.

They found that three out of four people who contacted them for help can put their problem debt down to a life shock – which the coronavirus represents to everyone facing unemployment or currently being furloughed.

But the charity is already finding itself in demand with one person turning to them for help every 49 seconds while the average unsecured debt per client is £14,129 – a figure that has risen eight per cent over the past four years.

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