It is “insane” that people on Universal Credit have to wait six weeks before they get paid the first installment of the benefit, a Tory peer has said.
Simon Wolfson, the chief executive of Next who also sits in the House of Lords, said while Universal Credit “in principle is a great idea” - how it was operating was a mistake.
“This idea people have got to wait six weeks to get paid must be wrong,” he told BBC Question Time on Thursday evening.
Wolfson said it did not make sense that claimants had to borrow money to tide them over until they got paid rather than for the government to pay people in advance by default.
“Those people who are in that postiion, they will have to go to very most expensive lenders,” he said. “It is insane for the government not to be the borrower.”
Universal Credit, the brainchild of former cabinet minister Iain Duncan Smith, combines six of the main welfare benefits into a single payment.
It has been slowly rolled out across the country and is expected to be fully in place by 2022. Once complete, more than seven million households will receive it.
The government has been under pressure from Labour as well as backbench Tory MPs to pause the rollout amid concerns a six week wait for benefit payments is leaving people unable to pay bills or buy food.
Duncan Smith defended the benefits shake-up on BBC Radio 4′s Today programme this morning.
He said the main problem was that people were moving onto Universal Credit with pre-existing debts from the previous system.
“The way it was set to roll out is unique because, in the past when tax credit was rolled out, it was rolled out cross the country at one go. Nearly a million people got not money. And, since then, it’s been open to fraud and abuse. Some people say over £20bn has been lost through fraud and tax credits,” he said.
“People still arrive in my surgery and many surgeries having huge debts at the end of the year because of tax credits.
“All of this goes with Universal Credit. But the problem is that when they moved tax credits over... many of these people - 60% coming on to Universal Credit - carry debts and arrears already, directly as a result of those arrangement which are failing.”