Universal credit will merge several benefits and tax credits into one monthly payout, causing a massive shake-up of the current UK benefits system. The system has been rolled out to a very small number of new claimants in Ashton-under-Lyne in Greater Manchester, but will eventually affect nearly eight million people. The new monthly lump sum will replace income-based jobseeker’s allowance, income-related employment and support allowance, income support, child tax credit, working tax credit, and housing benefit. Iain Duncan Smith, the work and pensions secretary, said the new system was about “changing people”.The government has suggested that the benefit overhaul will mean people are always better off in work than on benefits, and that the change will simplify the welfare system by bringing a number of benefits together and reducing fraud and error.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