Universal Credit – what is it and who will be affected

On 29th April the Government, as part of their benefit change package, has started to trial Universal Credit for the first time. Here I explain Universal Credit and who will be affected.

What is Universal Credit?

Universal Credit is a new single payment for people who are looking for work on a low income. It is designed to simplify the benefits system by bringing together a range of working age benefits into a single payment.

Universal Credit will replace:

• Income-based Jobseeker's Allowance
• Income-related Employment and Support Allowance
• Income support
• Child Tax Credits
• Working Tax Credits
• Housing benefit

What changes are there between Universal Credit and the current system?

The main differences are:

• available to people who are  in work on a low income, as well as those out of work
• most people will apply online and manage their claim through an online account
• claimants will receive payments on a monthly basis straight into a bank account
• support with housing costs will go to the claimant rather than direct to the landlord
• if both partners are receiving benefits there will be one payment made for the household

What are the timescales for implementing Universal Credit?

The system was originally to be rolled out nationally from October 2013 but it now appears that this deadline will not be met due to complications with the implementation. It is feared that the old and new systems will have to run in parallel for some considerable time to ensure claimants are not left without money. At the moment the Universal Credit is on trial in Ashton-under-Lyne before moving onto Oldham, Warrington and Wigan.

Is there opposition to these benefit changes?

There is considerable opposition to these changes with over 475,000 people having signed a petition on change.org website.

The main issues are:

• one payment will be made to a household rather than to individuals, creating potential problems in managing the finances between couples
• monthly payments may make budgeting difficult leaving some people prey to unscrupulous lenders
• suport with  housing costs will be paid to the individual rather than the landlord with the potential for people to  use this money for items other than rent

Conclusion

According to Work and Pensions Secretary Iain Duncan Smith, the introduction of Universal Credit is a 'fundamental culture shift of the welfare system'. Whether he is right or not depends on the successful implementation of the changes without claimants being  seriously disadvantaged.