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 55.

    49. You are rather assuming the local library has not been shut due to government cuts.

  • rate this

    Comment number 54.

    Regardless of the rights or wrongs of this, it's the technology that worries me: Government and major IT projects don't seem to mix. Example: the NHS records system, countless millions poured into a black hole which was eventually cancelled. The omens aren't good, the trial area has shrunk to a tiny little patch and the internet access required is antique! You can forget smart phone access!

  • rate this

    Comment number 53.

    Landlords have hiked up their prices to a level associated with housing benefit. This was seen by them as a government funded gravy train.

    Hopefully this change in the way benefits are managed will bring back a genuine market to the rental sector.

  • rate this

    Comment number 52.

    8. casualobserver84
    Now hopefully they can spend less time fighting fraud among the low paid and focus more on avoidance from the high paid - hope springs eternal!
    I fear that yesterday's "the rich should shun benefits" comments will in fact just cause a rush for the nearest tax avoidance schemes, rather than put money back into the pot. Not thought through

  • rate this

    Comment number 51.

    I think what IDS has done is great. It has simplified the system by rolling multiple credits into one which makes it easier to manage for the individuals claiming it and for the government to detect fraud.

    It helps to ensure that work pays more than benefits too, which is absolutely fundamental. This is definitely a correct step in reforming the welfare state whilst caring for the needy.

  • rate this

    Comment number 50.

    I'd be a bit more impressed if the government would tackle the tax avoidance loopholes for their pals that lose us much more than benefit fraud. NTM the billions we give to bankers to cover their gambling habits. Having lived elsewhere, I feel UK public get shafted and our right wing press encourage us to blame onto the victims.

  • rate this

    Comment number 49.

    34. ricky-dickulous - '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'

    - Perhaps not?, but they'll find that their local library does!

  • rate this

    Comment number 48.

    A little clarification.
    A SINGLE PERSON is someone who lives with their parents or a HMO with friends.
    A ONE PERSON FAMILY is someone who lives alone but has all the expenses associated with running a household. I'm sure there is no gain for one person families under this system. Why has the BBC chosen not to provide an illustration for this (the UK's fastest growing social construct) group?!

  • rate this

    Comment number 47.

    It's a good day for Wonga, Cash Converter etc!

    Benefits are a symptom, low pay, low expectations, low skilled economy are the problem!

  • rate this

    Comment number 46.

    Get ready for the bleats everyone ! The Socialists will be in full scream. Still I have not see yet even one reason that Benefits should not be capped at a much lower rate the £ 26 K I still have not seen any bleats from them that this Idle Socialists elite should be on a tax free income above that which many of the victims of the Socialists who pay for it all get ? WHEN ARE WE GOING TO SEE THAT

  • rate this

    Comment number 45.

    If people think the benefits system is a mess now, just wait until this kicks it! It's so shambolic even the trials were mostly cancelled. Like everything IDS touches, his ignorance, incompetence and vindictiveness shines through. What happened to all those private firms who were going to help manage those are unable to cope with change eh. IDS? You seem to have forgotten about them, wonder why.

  • rate this

    Comment number 44.


  • rate this

    Comment number 43.

    Get ready for some "teething problems".

  • rate this

    Comment number 42.

    Putting universal benefits, and benefits being paid monthly aside. Making people claim them online is stupid, it is forcing the poorest in society to pay for phone lines and internet access - minimum of 15 quid a month out of what little they get to live off. Not all towns have Job Centers and libraries yet online libraries with computers and internet access - a lot of them have been closed

  • rate this

    Comment number 41.

    Over half the benefit bill is pensions - but that's ring fenced. Not surprising since the large majority of pensioners vote Tory. Oh - the large majority of pensioners vote on this BBC forum as well - so we always have a skewed response.

  • rate this

    Comment number 40.

    Dear BBC commenters I need help. There is a certain set of regulars to these comment panels that have endless opinions about political stories. I'm trying to collate some of them on a FB page. If you can please take a moment to help me compile some of your thoughts.
    Thank you.

  • rate this

    Comment number 39.

    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!
    They can cancel the SKY sub and buy a computer.

  • rate this

    Comment number 38.

    There will inevitably be feckless individuals who, on receipt of a big fat benefit cheque, will blow the lot in short order and then cry wolf! That's their problem. We should not molly-coddle them. We all have to learn how to manage our money. Budgeting is a necessary life-skill. Some will doubtless learn the hard way...but learn they will!

  • rate this

    Comment number 37.

    People appear to be tough on people on benefit aren't all rich. I'm from poor background and appreciate the help that was available. But many, me included, find the system to be too protective. It should be a platform for people to get back on social ladder, not a colourful bubble.
    We can't afford to live in London, we move out. Give them the benefit money and treat them like adults.

  • rate this

    Comment number 36.

    A few months ago the Government tried the idea of paying housing benefit to the claimants instead of directly to the landlords. The idea was that it would make those people more responsible because it was viewed it was demeaning not to trust them to pay their rent.

    And what happened? There was a huge increase in rent arrears. Basically, a lot of people can't be trusted to manage their own money.


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