Universal Credit: What are the new rules, and how will they affect me?

From tomorrow, the Government will start rolling out the biggest changes to the welfare state since the 1940s

Kashmira Gander@kashmiragander
Monday 16 February 2015 16:34

Historic changes to the welfare system will come into force tomorrow as the Government rolls out the Universal Credit, amid criticism that it would take more than 1,500 years to implement if current enrolment rates are maintained.

But what is universal credit, and how could the biggest shakeup of the welfare state since the 1940s affect your life?

What is Universal Credit?

Universal Credit is a means-tested benefit for people of working age with a low income, which will be organised online. via job centres.

It will be phased in across England, Scotland and Wales from tomorrow, following trials in north-west England and London, and could potentially affect as many as 8 million households across England and Wales.

The Government aims to offer it in some way at all job centres in Britain by the spring of 2016.

Under the new system, weekly or fortnightly benefit instalments will be replaced by a monthly payment into a claimants’ bank or building society account – making it similar to a monthly salary.

This untaxed monthly payment will replace six income-based benefits: Jobseeker’s Allowance, Housing Benefit, Working Tax Credit, Child Tax Credit, Employment and Support Allowance, and Income Support.

People who are in work, looking for work, disabled, or caring for a child or a disabled person may be eligible to receive the Universal Credit.

But claimants must accept a claimant commitment – a document outing certain tasks which need to be completed to receive payments.

What does the Government say?

The Government argues Universal Credit is designed to prevent situations where people can be worse off taking jobs than staying on welfare.

Defending his embattled flagship policy over the weekend, Work and Pensions (DWP) Secretary Iain Duncan Smith said the new system helps people to find work quicker and earn a higher salary.

Addressing delays to its implementation, Mr Duncan Smith insisted it had been better to delay the scheme rather than risk problems.

According to Government research, those receiving the benefit were 5 percent more likely to find employment within four months when compared to people claiming Jobseekers Allowance.

During that time, claimants spent an average of four days more in work during that period, earning around £50 more, according to the analysis.

According to the DWP, over three million will be better off by an average of £2,000 a year.

What do the critics say?

The shadow Work and Pensions Secretary, Rachel Reeves, said it would take more than 1,500 years to roll out universal credit to all claimants if the current rate of enrolment was maintained.

“The only person who believes Iain Duncan Smith's promises on Universal Credit is Iain Duncan Smith,” she said.

”Iain Duncan Smith promised one million people would be claiming Universal Credit by April 2014. But the latest figures show only 26,940 people on the new benefit. At this rate it will take 1,571 years to roll out Universal Credit.

She said that Labour would instead call in the National Audit Office to carry out an immediate review of what she called a “failing programme”.

Javed Khan, chief executive of charity Barnardo's, said the charity it “deeply concerned” by parts of the system.

“We are deeply concerned that a series of 'stealth freezes' by the UK Government have eroded Universal Credit to the point where poor working families in future will be left almost no better off by this system than they were before.

”Struggling families are increasingly telling us they are having to choose between heating their house and eating, as the rising cost of living has left them unable to pay energy bills.

“We are urging the Government to urgently restore the link between benefits and inflation, so that when Universal Credit is rolled out to families it will help provide the poorest households with a wage they can thrive on.”

Critics are also concerned that those who do not have bank accounts or internet access will face difficulties preparing for the new way the benefit is run and paid.

Additional reporting by PA

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