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
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. There is also the possibility that many potential claimants do not have access to the internet.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, during the initial transition, no current claimant will miss out assuming their circumstances stay the same.The contents of this article are intended for general information purposes only and shall not be deemed to be, or constitute legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article.Setfords Solicitors are a national full service law firm, with dispute resolution solicitors in Ryde and across the country.