Universal credit starts today

Mon, 29/04/2013 - 13:16 -- nick

The government has today launched its new universal credit scheme.

It is being tried out in one area first - Ashton-under-Lyne in Greater Manchester - but will be extended to the whole country from October 2013.

Universal credit replaces a range of benefits, including income-based jobseeker's allowance, income-related employment and support allowance, income support, child tax credit, working tax credit, and housing benefit.

Nearly six million people will receive the new payment.

A key change is the move to managing benefits online, with employers asked to enter details of earnings and benefits being adjusted according to these earnings.

Claimants will also be required to use the online system unless they specifically opt out of it, raising questions on the suitability of the system for those with low levels of IT skills.

The government has responded to this by promising every jobcentre will have a 'digital champion' who will "help staff support and encourage claimants to take their first steps online and see the benefits of being able to use the internet".

The aims of universal credit include ensuring that work always pays, making it easier to change claims, simplifying the system, reducing fraud and error, and reducing poverty.

The government has claimed that working people will always be better off under the new system, but the Institute for Fiscal Studies (IFS) says "couples, and particularly those with children, look set to gain by more, on average, than single-adult families, particularly lone parents, who will lose on average according to our analysis".


Doubts have been raised on the readiness of the new £500 million IT system at the centre of the scheme.

Its launch was originally due to take place in four areas of England, and this has been reduced to only one due to problems in the system.

It has been reported that the pilot will only include simple cases where claimants have no additional needs and where their claims are new, raising questions on how well it is likely to test the system before its nationwide launch.

The move to monthly payments is likely to cause problems for some claimants.

The government believes this is important to mirror the way that salaries are paid, but less frequent payments are likely to lead to budgeting issues for those not used to them.

Direct payments to landlords will be stopped, and housing benefit paid direct to claimants, leading to accusations that, combined with capping housing benefit, this will lead to claimants meeting some of their rent costs from other benefits, increasing the likelihood of poverty.

Ian Duncan Smith, Secretary of State for Work and Pensions, told the BBC that universal credit would help ensure workless people find jobs:

"We want to say to people, you're claiming unemployment benefit but you're actually in work paid for by the state: you're in work to find work. That's your job from now on: to find work."

Labour's work and pensions spokesperson, Liam Byrne, saw the scheme as "a fine idea that builds on Labour's tax credits revolution".

But he added "The truth is the scheme is late, over budget, the IT system appears to be falling apart and even DWP [Department of Work and Pensions] ministers admit they haven't got a clue what is going on."

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