Universal credit: Benefits start move to monthly payments


Iain Duncan Smith said the slow roll-out of the changes, over four years, was "common sense"

A massive shake-up in the UK benefits system has begun, with the first claims made for new universal credit payments.

Universal credit will merge several benefits and tax credits into one monthly payout.

It begins with a very small number of new claimants in Ashton-under-Lyne in Greater Manchester, but will eventually affect nearly eight million people.

Iain Duncan Smith, the work and pensions secretary, said the new system was about "changing people".

'Right not early'

The benefit is for working age people looking for work, and will replace income-based jobseeker's allowance, income-related employment and support allowance, income support, child tax credit, working tax credit, and housing benefit.

It is the central plank of a benefits overhaul, championed by Mr Duncan Smith, which the government says will mean people are always better off in work than on benefits.

Universal credit timetable

  • April 2013: First claims taken in Ashton-under-Lyne
  • July 2013: Delayed pilot schemes start in Warrington, Wigan and Oldham
  • October 2013: New claimants nationally move to universal credit
  • Spring 2014: Current claimants start shift from existing benefits to the new payment
  • 2017: Switch is completed

It is also designed to simplify the welfare system by bringing a number of benefits together and reducing fraud and error.

However, some groups have raised concerns that the system is entirely dependent on a complex computer network which may not be ready or able to cope with millions of claims. They are also concerned that many potential claimants do not have access to the internet.

Labour's shadow work and pensions secretary Liam Byrne said that universal credit was "a fine idea that builds on Labour's tax credits revolution".

But he added: "The truth is the scheme is late, over budget, the IT system appears to be falling apart and even DWP [Department of Work and Pensions] ministers admit they haven't got a clue what is going on."

But speaking to the BBC's Today programme, Mr Duncan Smith defended the new system, saying "it's quicker, it's more accurate and it's easier to understand", and said the slow pace of the roll-out was designed to "get it right, not get it early".

Liam Byrne: "This is not the big shake-up we need in the benefits system"

"What we have to do is to start changing people, and that's what this system is about," he said, stressing that paying people on a monthly basis would reflect how the majority of workers are now paid.

"It's about trying to help those who are the most vulnerable to get ready for the world of work, and that will improve their lives dramatically."

Online claims

The key features of universal credit include:

  • A single, monthly payment which the government says mirrors the world of work, but charities say could create problems for personal money management
  • The inclusion of financial help to pay rent, which is currently paid directly to landlords
  • An online-only claiming process, with accounts also managed online
  • The benefit paid to households, rather than individuals, and put straight into bank accounts
  • Benefits automatically adjusted depending on earnings, which employers enter into a computer system called real-time information

This means that there will no longer be a ceiling of 16 hours of work a week, below which people can sign on and above which claims are cancelled.

This is set to benefit people like Darren Bailey, an agency worker, whose working hours fluctuate, meaning he has to keep making claims under the current system.

"I have five kids so I can't afford to mess about," he said. "Any system has got to be better than this system."

Universal credit graphic

The government estimates 3.1 million households will be entitled to more benefits as a result of universal credit, while 2.8 million households will be entitled to less. However, nobody would lose out during the initial transition assuming their circumstances stayed the same, the government said.

Computer keyboard All claims for universal credit will need to be made online

Across all households, ministers say there will be an average gain of £16 per month. The long-term cost to the government is £100m in current prices.

The only claimants to receive universal credit in the initial stages will be single, new claimants at a jobcentre in Ashton-under-Lyne.

Three other pilot projects - in Warrington, Oldham, and Wigan - have been delayed until July.

From October, newly unemployed people will make claims under the new system. Current benefits and tax credits will gradually be shifted to universal credit from spring 2014, with the whole process completed by 2017.

Benefits and grants charity Turn2us said that 43% of people whose benefits would be replaced by universal credit were not aware of the change.

"Once you look at the nuts and bolts, budgeting is not going to be easy especially for those with a small amount of money," said Alban Hawksworth, welfare benefits specialist at the charity.


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  • rate this

    Comment number 35.

    When has a cabinet minister from this government shown any common sense?

    It has to be bred out of them in their formative years by their nannies and then prep school.

  • rate this

    Comment number 34.

    This assumes that, everybody who is in need of help through the benefit system has a computer at home that is linked to a broadband account. Of course they have! Even though they may be struggling to pay the rent and other essentials. The Government need to get in the real world!

  • Comment number 33.

    All this user's posts have been removed.Why?

  • rate this

    Comment number 32.

    i feel for those people whom are not computer literate, and the many whom cannot even read or write,the government says use the public libraries,but they are closing due to cutbacks, and they say 80% are on-line many on benefits cannot afford to go on-line an idea ill thought out as many have been by people whom have no idea of poverty and its effects on the home £57 no internet

  • rate this

    Comment number 31.

    Those two dreaded letters for many Govt departments... I and T

    They say the roll-out is slow but in reality they have got till October (6 months) to identify problems and then come up with a solution.

    After October if all new claimants are being shifted to an incomplete and unworkable system it will come back to haunt them.

    Like leaving the shore with a leaky boat and a storm on the horizon.

  • rate this

    Comment number 30.

    Acet : The flaw in your argument is that you're forgetting the multinationals at least contribute to society by employing UK citizens - the benefit claimants are a net cost and take away more than they contribute

  • rate this

    Comment number 29.

    Well the gradual roll-out should remove many problems from big-bang implementations.
    The monthly payment should also encourage people to budget, but I fear that many will not pay the rent (or buy other things with the money that was meant for rent).
    I also fear that many disabled and elderly will not receive the right benefit due to not being IT literate & the support centres being closed down.

  • rate this

    Comment number 28.

    Hopefully this is one small step to ending the culture of entitlement that has existed for far too long.

    Benefits should only be a safety net not a lifestyle choice.

  • rate this

    Comment number 27.

    I notice that Labour are not pledging to reverse the cuts and caps. It’s a pity the BBC cant show less bias on welfare, jumping on the bedroom tax bandwagon being a prime example, as we need to ensure the elderly and real needy are protected.

  • rate this

    Comment number 26.

    The boys in the know strike again...!!

  • rate this

    Comment number 25.

    People who work have to make the same efforts to budget and many employed people too are paid monthly. If the employed manage a job, child care paying the mortgage/rent as well then there shouldn't be any exception for the jobless. The unemployment benefit system should return to being a safety net and unemployed people have too get by on a limited income just as the employed do.

  • rate this

    Comment number 24.

    People with benefits are low income and spend pretty much all their money in consumption in the UK.

    Large multinational tax evading companies consume very little and most of if outside the UK.

    Tax evasion is at least 10 times more money than benefits abuse.

    It thus makes all the sense in the world to cut benefits rather than squash tax evasion.

  • rate this

    Comment number 23.

    Unless benefits are paid a month in advance (which I doubt) claimants will find it difficult to budget. How many people on benefits have enough savings to cover a months food and bills. I can see loan sharks circling.

  • rate this

    Comment number 22.

    It makes complete sense to have one system and one benefit. It also makes sense to get people used to working through a bank account. As ever it's a question of how fairly (and as it's Britain how competantly) it's done. Plus the IT needs to work.

  • rate this

    Comment number 21.

    Universal Credit is a disaster waiting to happen - giving people first dibs on their rent money will ensure only some or none of that will actually go to landlords - evictions and homelessness will soar. Paying the single payment to one person only will cause bullying and dominance in households and the claimant commitment will drive many to poor mental health.

  • rate this

    Comment number 20.

    I forsee problems...

    Take an example that I've had in the past - my JSA was stopped due to a clerical error. However I was never informed. Thus I ended up waiting 2 weeks, going to sign on, and finding out I would receive no money, and then would have to wait for my claim to be properly processed.

    I can see that happening with the UC - the switch will be botched.

    Then what?

  • rate this

    Comment number 19.

    A one off payment each month

    The "payday loans" companies must be rubbing their grubby little hands together in glee

  • rate this

    Comment number 18.

    Something has got to be done and this is a start.

    For years our benefit system has gotten bigger and bigger and now it's a monster that's out of control. It's supposed to be a safety net, not a option if you don't fancy working.

  • rate this

    Comment number 17.

    I have no real problem with reform of the benfits system as such, but I do have a problem with the vilification of those claiming benefits. like pensioners and public sector workers, the tories seem the regard those claiming benefits as lower class. how dare they not work during the worst recession in living memory

  • rate this

    Comment number 16.

    The benefits system is in a mess. I don't really think Labour can say much seeing as they allowed the system to be opened up uncontrollably in the first place.
    Benefits need to be simplified and restricted, after all those not on benefit have to budget and watch what they spend in these austere times, why should benefit claimants be any different?


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