Cost of living payment: DWP denies £326 support to ‘sanctioned’ Universal Credit claimants

Some Universal Credit claimants have denied a vital cost of living payment because they were ‘sanctioned’ by the Jobcentre.

Around eight million low-income households on benefits started to receive the first instalment of a £650 payment last month to help with rising energy costs.

The £326 payment began to rollout to eligible households from 14 July, with the second instalment of £324 to follow later this year in autumn.

However, guidance sent to Department for Work and Pensions (DWP) staff reportedly told them to refuse the payment to certain claimants if their benefits were stopped, the Mirror reports.

Campaigners have demanded that the DWP revoke the “outrageous” and “ill-judged” decision, particularly as energy bills are expected to soon top £5,000 per year.

Mark Winstanley, chief executive of Rethink Mental Illness, said: "This decision compounds the distress sanctions cause, inflicting significant damage on people’s mental health.

“The DWP must urgently review this decision and administer the cost-of-living payment to those affected as soon as possible to prevent unnecessary suffering and harm.”

59,000 new sanctions for Universal Credit claimants

A record 59,000 new sanctions were slapped on Universal Credit claimants in March alone this year, new figures show, and numbers have steadily increased since face-to-face Jobcentre appointments restarted last summer.

The number of claimants subject to a sanction rose from 3,827 in May 2021 to 109,506 in May 2022.

Numbers increased slowly through winter and leaped after ‘Way to Work’ launched in February, from 74,746 in January to 93,479 in March.

Sanctions mean claimants’ benefits are either cut back or stopped completely if Jobcentres decide they have fallen foul of rules.This includes if work coaches decide that claimants “fail to take all reasonable actions to find paid work”.

Guidance to DWP staff said people whose Universal Credit was stopped entirely due to a sanction in a “qualifying period” - which lasted a month earlier this Spring - “will not be entitled to a cost of living payment”. This is called a “nil award”.

The ruling was not mentioned directly in general advice issued on the government website about the payment but, after being approached by The Mirror, the government confirmed that this is in fact the case.

The website states that claimants will not be eligible for the cost of living payment if their earnings reduced their Universal Credit to £0 for the qualifying assessment period, but did not mention any sanctions.

It also adds that if money has been taken off for other reasons, such as payments of rent to your landlord or for money that you owe, claimants may still be eligible.

A DWP spokesperson said: “We’ve always been clear that those with a Universal Credit ‘nil award’ during the qualifying period won’t be eligible for the first instalment of the Cost of Living Payment. However, those with a ‘nil award’ due to a sanction could be entitled retrospectively if the sanction is successfully appealed.

“For those who didn’t receive the first instalment, our £37bn support package provides other help including a £400 energy payment, available to all households. People are only sanctioned if they fail, without good reason, to meet the conditions to which they agreed.

“Sanctions can often quickly be resolved by re-engaging with the Jobcentre and attending the next appointment.”

What other circumstances would cause the payment to be denied or delayed?

Eligible households are starting receiving the £326 cost of living payment last month, but for those who are still waiting here are some explanations as to why the payment may not have arrived in your account.

Payments are being staggered

The DWP confirmed that the £326 would arrive in the bank accounts of eligible households on 14 July, but could be delayed due to the volume of people in line to receive it.

Work and Pensions minister David Rutley explained: “Due to the volume of people entitled to the payment, it is not possible to issue all of the Cost of Living Support Payments at the same time.

“Issuing payments will be staggered, but not by benefit type, starting on 14/07/2022.”

Your claim is a unique case

The DWP warned there “may be potential delays for a small minority of cases due to their unique characteristics”.

Mr Rutley added: “We currently expect the majority of payments to be made by the end of July, there may be potential delays for a small minority of cases due to their unique characteristics.”

It means the vast majority of the eight million people eligible should receive the first part of the £650 cost of living payment between 14 and 31 July.

You are on tax credits

If you are on Working Tax Credit or Child Tax Credit, which are both administered by the HMRC, you will receive your payment slightly later than those on the benefits listed above.

The DWP confirmed earlier this year that payments from HMRC for those on tax credits only will follow shortly afterwards to avoid duplicate payments.

This means those who only receive tax credits should get their first £326 instalment “from autumn”, with the second to follow “from winter”, although exact dates have not yet been confirmed.

You were outside the entitlement period

To get the first cost of living payment of £326, you must have been entitled to a payment (or later found to be entitled to a payment) of Universal Credit for an assessment period that ended between 26 April 2022 and 25 May 2022.

The government will later announce the qualifying dates to get the second payment of £324.

You must have been entitled to certain payments

To get the first £326 instalment, you must have been entitled to a payment (or later found to be entitled to a payment) of income-based JSA, income-related ESA, Income Support or Pension Credit for any day in the period between 26 April 2022 and 25 May 2022.

The government will later announce the qualifying dates to get the second payment of £324.

You must have received tax credits

To get the first £326 cost of living payment, you must have received, or later receive, for any day in the period between 26 April 2022 and 25 May 2022:

• a payment of tax credits
• an annual award of at least £26 of tax credits

The government will later announce the qualifying dates to get the second payment of £324.

You received your benefits late

The DWP has said your cost of living payment may come later if you are awarded a qualifying benefit at a later date.

The payment will be issued to you automatically and you do not need to contact DWP or HMRC.

You changed your payment account

The cost of living payment is paid into the same account where you usually receive your benefits or tax credits, but if you change this by requesting payment into a different account or switching banks, for example, then this could interfere with the automatic payment process.

In this case, the DWP will not be able to pay the money to you until it has updated the details of your preferred method of payment, so you should inform officials of any account changes as soon as possible.

You do not qualify for the payment

The £650 payment is limited to specific benefits, so if you receive other benefits that are not listed above you will not be eligible.

The government says you are not eligible for the payment if you get New Style Employment and Support Allowance, contributory Employment and Support Allowance, or New Style Jobseeker’s Allowance, unless you get Universal Credit.