Universal Credit Rollout to go ahead as planned

What is Universal Credit and how does it work?

Universal Credit was an idea put forward to simplify the welfare system. It intends to both help claimants and to help cut welfare fraud. It also proposes to encourage work and to make it easier for people to move between low-paid work without losing their benefits.

It involves merging six benefits into one monthly payment for working-aged people. Income support, income based jobseeker’s allowance, income-related employment and support allowance, housing benefit, child tax credit and working tax credit will all merge into one to form Universal Credit.

A single payment will be paid directly into the claimant’s bank account which will cover the benefits that they are eligible for. The claimants will then be in charge of payments such as rent and bills from this payment.

Provisions have been put into place for people that either have difficulty in managing their own money or are in difficult rent areas to have their rent paid directly to their landlord.

Universal Credit can be claimed whether people are in work or out of work. There will be no limit on the hours that people can work. Instead payments will decrease as you earn more money.

This way the system is designed is to ensure that no one is better off on benefits than in employment. Under the older system people on a low income could lose all their benefits as soon as they started working more than 16 hours a week. Under Universal Credit, welfare payments will be reduced as a consistent rate as earnings increase. For every extra £1 you earn after tax you will lose 63p in benefit payments.

Why has Universal Credit been controversial?

120 MPs, including the 12 tory backbenchers, have called into question the new system over claims it will leave new claimants ‘jumping off a cliff’. The main area of concern is the six week wait some claimants will have to wait while transferring to new system due to problems providing evidence claims.

The main problem area for claimants is housing. Claimants must show a recent tenancy agreement to claim the housing allowance. However, people that have lived at the same address for years or if their landlord was hard to reach or unapproachable had problems trying to provide the evidence.

Though, if they can provide evidence that they are in financial need while awaiting their first payment they can apply for an advance payment in the form of a loan. This will not be needed to be paid back in full for up to 6 months.

Universal credit was first announced in 2010 and since then has cost a vast amount more and taken much longer than anticipated. The National Audit Office, which oversees government spending said the programme’s timescale was overambitious and suffered from weak management and poor governance.