Duncan Lewis

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Commercial Property

Universal Credit system – definition and people who will be affected

Date: (1 May 2013)    |    

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The government as part of its benefit reforms package has started to trial Universal Credit for the first time from 29th of April. There are some who are going to be affected
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.
It is going to replace, Income based jobseekers allowance, Income support, Child Tax credits, working tax credits, Housing benefits
Changes between Universal Credit and Current system:
The main differences are:
• Available to people who are in work on low income, as well as those out of work,
• Most people will apply online and manage their claims through online account
• Claimant to receive monthly benefits directly to their bank accounts
• If both partners are receiving benefits they would receive a single payment made for the household
• Support with housing costs will go to the claimant rather directly to the landlord

Timescale for implementation of Universal credits
The system was to roll out nationally from Oct 2013 but the deadline may not be met due to complications in its implementation. It is being feared that the old and the new system may have to run concurrently for considerable time to ensure claimants are not left in lurch – without money. It is currently on trial in Ashton- under- Lyne, before moving onto Oldham, Warrington and Wigan.
Opposition to the system
There has been a considerable opposition to these changes with over 475,000 people having signed a petition.

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 most beneficiaries prey to unscrupulous lenders
• Support with housing costs will be paid to the individual rather than the landlord with the potential for people to use his money for items other than rents.
Though the Works and Pensions Secretary Iain Duncan Smith has said that Universal Credit system was a fundamental culture shift of the welfare system – it has to be seen whether the changes are without flaws and its success depends on its successful implementation of the changes without claimants being disadvantaged.