What is the Universal Credit?
The Universal Credit is one payment which replaces lots of different benefits. The benefits it replaces are:
- Income-related Jobseeker's Allowance
- Income-related Employment Support Allowance
- Income support (Including support for mortgage interest)
- Working Tax Credits
- Child Tax Credits
- Housing Benefits
Who will receive the Universal Credit?
People who receive the listed benefits will receive one monthly Universal Credit payment instead of multiple weekly / fortnightly payments.
For the first time, all new Housing Benefit recipients will receive their payment directly instead of it going straight to their landlord / housing association.
When and where is Universal Credit being introduced?
The Universal Credit is being trialled with new claimants in Ashton-under-Lyne, in the North West, as of April 2013.
Between October 2013 and March 2014, Universal Credit will be extended to all new claimants of these benefits across Great Britain.
The government plans to phase in the Universal Credit to all benefit recipients within the next four years. So it probably won't be completely rolled out by the next general election.
Why have the government brought in Universal Credit?
The Government policy behind the Universal Credit is "making work pay". At the moment, benefits are paid fortnightly or weekly, whereas Universal Credit is a single monthly payment that mimics a salary. It "replaces a complex set of payments with one simple payment".
It's hoped that it will help benefit recipients manage money the same way as people who work, removing some of the stigma of receiving benefits - and ultimately it's hoped it'll help and encourage people back into work.
How has it been received?
The BBC reported that during a pilot scheme in pockets of the UK, there was a sharp increase of tenants who went into arrears on their rent. This is because housing benefit was paid directly to them - perhaps for the first time - instead of directly to their landlord or housing association. Moving from weekly to monthly payments could have caused financial problems too.
How a thinkmoney Personal Account could help
thinkmoney provides a budgeting service that is ideal for people who receive Universal Credit. The service helps people to budget for regular bills, such as rent, by ring-fencing that money, leaving them with spending money that is safe to spend.
There is a monthly fee of just £17.50 for the service, and there is an option of opening a joint account with a monthly fee of £24.50.