Almost half a million people sign up for Universal Credit as experts warn of 'dramatic early evidence' of economic hit 

The huge surge in people applying is believed to be significantly higher than at any point during the financial crisis


Almost half a million people have signed up to claim Universal Credit in the past nine days, ministers have revealed, as experts warned the figures were “dramatic early evidence” of the economic hit caused by the coronavirus outbreak. 

With large parts of the UK economy shutting down, Therese Coffey, the Work and Pensions Secretary, on Wednesday confirmed that 477,000 new benefit claimants had been registered since last Monday, with 105,000 processed in a single day. 

The surge in applications is ten times higher than normal and was described as “unprecedented” by Peter Schofield, the permanent secretary of the Department for Work and Pensions (DWP). 

With the average household on Universal Credit receiving £660 per month, the surge in applicants is also likely to add billions of pounds to the total cost of the system, which had previously been expected to hit £60bn per year by the time it is fully implemented.

The trend appears to be replicated across other Western economies, with Norway’s unemployment rate more than quadrupling in the past two weeks and Israel’s jumping to nearly 20 percent.

Economists are now predicting that US unemployment figures, due to be released on Thursday, will be the worst on record, with 3.4 million Americans expected to file new claims for unemployment insurance, according to the Economic Policy Institute.

Although the plunge in global stock markets has already highlighted the economic fallout triggered by the pandemic, the latest benefit figures provide the clearest evidence to date of the impact on the UK workforce. 

The Resolution Foundation said the increase “dwarfed” the spike seen at the height of the financial crisis. 

It added that the number of applications registered over nine days was greater than successful claims made for Jobseeker’s Allowance in “any month” following the 2008 crash. 

Whilst Ms Coffey was unable to confirm the employment status of new claimants, it is expected that a significant number will have lost their jobs due to the pandemic.

The number of applications processed is almost equal to the fall in unemployment over the past five years. It stood at 1.34 million at the beginning of 2020, according to the Office for National Statistics. 

It comes after a YouGov poll published earlier this week suggested as many as 5 percent of people had become unemployed due to the outbreak. 

Paul Johnson, the director of the Institute for Fiscal Studies, said the figures represented “dramatic early evidence of the scale of the hit to the economy and people’s living standards.” 

He added that it represented a “colossal challenge” and an “unprecedentedly sharp increase in pressure on the welfare system."

Echoing his comments, Karl Handscomb, a senior economist at the Resolution Foundation added: “The unprecedented surge in new Universal Credit claims shows that the UK is already in the midst of an unemployment crisis.

“The increase in claims is putting huge pressure on our social security system, and is driven by a huge hit to family incomes.

“The Government was right to increase the generosity of the benefits system last week. It now needs to ensure the resources are there so that claims are processed quickly, and people receive support as soon as possible.”

Appearing before the Commons work and pensions committee, Ms Coffey said that despite the immense pressure being placed on the system it was coping and processing claimants at pace. 

She added that additional money had been channelled to an online verification programme used to screen applicants, while 10,000 staff were also being redeployed to the frontline to process claims. 

The DWP is expected to recruit an extra 1,500 officials to help speed up the process. 

"I want to reassure people that help, even if it is not currently the level of help that they would like, is there to help them through the safety net of the welfare state,” Ms Coffey said. 

Her comments were echoed by Mr Schofield, who said that despite experiencing “capacity challenges”, the system had so far been a “major success”.

However, the Government has faced criticism over the length of time that some claimants are being forced to wait for their applications to be processed. 

On Tuesday it was reported that one applicant had been told they were number 111,322 in the queue waiting to be identified by the DWP, while on Wednesday another was reportedly one of at least 145,000 waiting. 

The Government is also facing growing calls to scrap its identification checks in order to cut the five-week wait before claimants can receive their first payment. 

But when asked about accelerating payments on Wednesday Ms Coffey said it would be “technically difficult”, adding that the DWP needed a month to assess a claimant before their first payment could be made. 

She said that during the intervening period, advances for those needing to pay bills and other costs could be made “to people pretty quickly”.

About a quarter of the people, roughly 70,000, who registered last week asked for advance payments, she told the committee. 

"The best way to deliver at these volumes is to keep the system as it's going and to drive it forward,” Mr Schofield added.