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
Budgeting

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
    +95

    Comment number 95.

    1) We've outsourced manufacturing to the Far East.
    2) We've outsourced IT to India.
    3) We've outsourced heavyish engineering to the rest of Europe.
    4) I had the "rug pulled from under me" on 3 occasions, and it was never my fault.

    Unemployment can happen to anyone.

    Benefit's are just a symptom.

  • rate this
    +138

    Comment number 94.

    Some bloke on the radio moaning about only being £20 a week better off working than on benefits so "what's the point?"

    I'll explain the point. Benefits are paid to you from taxes taken from my salary, because I do work

    If you work, the money you get is earned by you. If you don't work, the money you get is earned by me

    That's the difference and that's why you should work if you can

  • rate this
    +2

    Comment number 93.

    A system which makes people better off in work than out has got to be a step forward.

  • rate this
    +8

    Comment number 92.

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

    Unscrupulous ones yes, they are more akin to loan sharks. Any reputable lender should not be lending to the unemployed.

  • rate this
    -3

    Comment number 91.

    Iain Duncan Smith inching ever closer to the day he can start selling Soylet Green.

  • rate this
    +11

    Comment number 90.

    Rather than relying on libraries to get internet access, surely it would make more sense to provide dedicated access, for those that need it, at Job Centres. Apart from getting helpful advice for those that have difficulties, (literacy being crucial), it should also help limit fraud/genuine mistakes.

  • rate this
    +2

    Comment number 89.

    Finally.Something to feel happy about.The system needs to get tightened and non-genuine benefit seekers to be made to get off their back side to do some work. Enough of these work shy people. Benefits need to be cut for those who dont need it.

  • rate this
    -1

    Comment number 88.

    Many sound idea's in principle.

    As usuall implemented in the most ham-fisted amature hour way possible!

    It's like they are so used to messing up that they have to ruin good ideas because they wouldn't know what to do if everything went well and everyone praised them!

  • rate this
    +4

    Comment number 87.

    the benifit system needed a big shake up, and I personnaly hope there is more to come. Too many UK citizens see it as an alternative to working rather than assistance through a tough period. Forigners see it has a hand out and can't believe how much they get when they get here. The more uncomfortable life is on benifits the better as far as I'm concerned.

  • rate this
    +1

    Comment number 86.

    Does the BBC allow comments on any other articles apart from ones that involve Conservative MP's saying something or about benefits or tax evasion?

  • rate this
    +1

    Comment number 85.

    I'll reserve judgement on this new system. Governments have a history of introducing costly mistakes in the name of benefit reform. The system does need changing, but I would have thought simplification would be better than complication. If there is one area that needs addressed it's Gordon Brown's so called "tax credits", which are pitched at a level the country can't afford!

  • rate this
    +7

    Comment number 84.

    Something needs to be done.
    The current system is crazy and it doesn't pay to work.

    Currently the hours i work and the pay i get, i would be better of not working.
    Working out what i am entitled to if not working i would be £20 a week better off. probably more considering dental care, travel costs to work etc.

  • rate this
    +3

    Comment number 83.

    75. jenko

    This will be the new housing eviction charter when landlords are not paid rent

    ---

    Or people will pleasantly surprise us and pay their rent with the benefit they're still receiving...

  • rate this
    +2

    Comment number 82.

    Re 49.Justin, Lucky you, my nearest Library is 12 miles away!n Used to have one in the village, but guess what................

  • rate this
    0

    Comment number 81.

    From 32. pete:
    "many on benefits cannot afford to go on-line..."

    You may get a kicking, as I did (post 1). It seems that forcing people on the lowest wages or benefits to pay for internet access and smart clothes to meet the highest standards of available jobs they'll likely never get is now acceptable behaviour! People will long for the days when Labour only suggested people pay for ID cards.

  • rate this
    +1

    Comment number 80.

  • rate this
    +3

    Comment number 79.

    In theory , brilliant, but a method for the elderly / infirm/mental ill need a robust system to enable them to claim, a 'help' to fill in / log etc..
    Those seeking work, should be able to access by computer for free ,library?, monthly payments , brilliant, back in the real world which is what is needed, try a on line budget planner. Too many are too comfortable doing nothing.

  • rate this
    +2

    Comment number 78.

    At last they will learn how to budget and take responsibility. Spent all money on booze - say hello to bailiffs with eviction orders. Can't afford to rent in Westminster? Welcome to real world, there are cheaper areas in London.

    As for IT system, you can't design and implement IT system at such scale without child illnesses. Anyone who has ever worked in dev knows this full well.

  • rate this
    +1

    Comment number 77.

    Engels and Karl Marx worked this patch 150 years ago. Nothing changes. IDS doesn't care that his 'great experiment' is up north and in Tory-unfriendly territory.

    Perhaps the people of Manchester might get a rising Peterloo feeling and repeat history. What a shame we have to.

  • rate this
    +4

    Comment number 76.

    Computers (if correctly programmed with decent input data) can handle complexity. People (as a rule) cannot. Whilst I understand the ambition of always making work pay and avoiding cliff edge claim criteria, I think that claimants are going to have a hard time adjusting to variable support payments.

    On the whole I support this, as it surely cannot be worse than the existing benefits system.

 

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