Bev Budsworth from The Debt Advisor joined a panel on Tony Livesey’s Late Night Chat on 5 Live last night to discuss the roll out of the Universal Credit and how this is likely to affect the 8 million individuals who may be entitled to claim the amalgamated benefit.
Bev adds, “Radio commentary means I have to carry out detailed research. I thought I would share this research below and hope you find the information useful”.
Yesterday Monday 29 April has seen the first role out of the new Universal Credit benefit for new claimants in Ashton-under-Lyne.
Universal Credit will replace a whole host of benefits including:
Child Tax Credits, Working Tax Credits, Housing Benefit, Income Support, income-based Jobseeker’s Allowance and income-related Employment and Support Allowance.
Not included are child benefit which has already undergone changes and Council Tax benefit where changes have also commenced.
This will effect all working age people aged 16 to 64 and couples will be assessed as a unit.
How does it work?
This will be a monthly payment made up of a basic personal amount (similar to Job Seeker’s Allowance) plus additional elements for:-
- child care costs
- limited capability for work
- caring responsibilities
There will be qualifying criteria for all these elements.
From April 2013, benefits will be capped at £350 a week for individuals (single adults) and £500 a week for couples (with or without children) and lone parent households. This is being introduced to try to ensure that no one can receive more on benefits than an average weekly wage, once tax and national insurance have been deducted.
Not everyone will be affected by the benefit cap. Households where anyone qualifies for Working Tax Credits will be exempt, as will those claiming Disability Living Allowance or Attendance Allowance. The child care element of the Universal Credit, once in force, will also be exempt.
Who will be effected?
This will effect all working age people aged 16 to 64 and couples will be assessed as a unit. Anyone who claims the benefits set out above will be effected not necessarily straight away as this will be phased over 4 years.
It starts for new claimants at Ashton-under-Lyne Job Centre and further roll outs in the North West for Oldham, Warrington and Wigan have been delayed until July 2013.
Can this be better than the current system?
The government argues that Universal Credit will make it easier for people to move in and out of work – if someone starts a job (even a temporary one), or they manage to secure more hours per week, their benefits will not be stopped, but will be decreased according to how much they earn, on a sliding scale.
They also state that it will replace the current somewhat complicated system, by replacing six different types of benefits with one, which will be paid on a monthly basis directly to the household.
What are the concerns?
The benefit will be paid once a month rather than weekly or fortnightly and also housing benefit is paid direct to the claimant. There are real risks of people who are already struggling with poverty and debt issues may fail to budget and will end up totally poverty stricken for several weeks each month.
A major concern is that, in the current economic climate, the changes just might not be pragmatic. The Resolution Foundation said in October it fears that 1.2 million low wage earners could end up with less if the Government imposes (quite tough) sanctions on those working limited hours or unable to get a job.
The sanctions will apply not just because a claimant refuses to look for work but also if they decide to give up a low paid job which may not suit them. Will this create a workforce in fear of losing low paid jobs and as such abuses could occur with employee rights being eroded?
Children’s charities are concerned even more children in the UK could be pushed into poverty and the Chartered Institute of Housing believe that the poorest 400,000 households could be worse off by 2015.
There are also major concerns over disabled people losing out. BBC news reported that severely disabled people who do not work could eventually lose benefits of up to £58 per week, and people with disabilities who do work could end up losing £40 per week – because once the Universal Credit is implemented, they simply will not be offered the same level of support (their money is protected during the transfer but not beyond).
There might also be problems with the way in which ‘fitness for work’ will be assessed, so people with certain ‘hidden’ health issues, such as mental health problems, could slip through the net.
Benefit caps also might be unfair – for example a larger family living in a relatively expensive area of the country could be particularly penalised. It’s thought that 54% of the households affected will be in the boroughs of Greater London.
Some people are worried about the mechanics of the Universal Credit – claims will need to be made online, and yet it is thought hundreds of thousands of people currently claiming benefits do not have the knowledge and/or means to make their claim over the internet. Others are concerned about the feasibility of a Government IT system being able to handle the Universal Credit anyway.
The Universal Credit will be awarded to households, but paid to one member of that household. The Women’s Resource and Development Agency has said it’s estimated up to 80% of claims will be paid to men.
This is a something domestic violence charities have raised concerns over – money is power, and they say it could trap women in abusive relationships.
Free Advice and Helpful Apps
As the Universal Credit is paid in one monthly instalment, the government needs to ensure that there are adequate resources available where people can get help and advice on how much they are likely to get and plus help with budgeting.
So what help is at hand?
Policy in Practice have developed a Universal Credit Calculator which is available as a free app for i-phones, androids and i-pads. There is a more detailed version available for advisors to help individuals work out what their entitlements might be.
Similarly Money Advice Service have developed a calculator plus helpful information and help with budgeting. For more information we suggest you visit:-
You can also call 0300 500 5000 and speak to a Money Advisor for unbiased advice on your money issues (call rates may vary).
There are many charities and local organisations that will help those who are not able to get help online. These include:-
Community Money Advice – CMA have local centres throughout the UK. All CMA centres adhere to basic principles that advice is free, unconditional and completely confidential. They also offer a “self Help Guide” which can be downloaded from their website www.communitymoneyadvice.com.
Citizens Advice – CAB have a variety of online tools to help with budgeting but if you need a face to face appointment, contact your local CAB where you will be offered free, confidential and impartial advice.
Christians Against Poverty are also passionate about lifting people out of debt and poverty. They have debt coaches and befrienders who can visit you in your own home to help you work out a realistic budget that prioritises your essential bills. For more information their number is 01274 760720.