The benefits system has traditionally been a complex minefield to negotiate, with a plethora of different payments for different requirements. The newly-unemployed claimant is faced with a list of benefits including income-based Jobseeker’s Allowance, income related-Employment and Support Allowance, Income Support, and possibly Child Tax Credits, Working Tax Credits and Housing Benefits – enough to make the head spin.
With this in mind the [UK] Government has replaced the list above with one, single means-tested payment – Universal Credit. This will be introduced across the country in phases.
From 2016 it will no longer be possible to claim for the previous benefits; by 2017 anyone still in receipt of those benefits will be transferred to Universal Credit. Claimants should not be too worried as they will be contacted regarding the new system, if it affects them. Here is an introduction to the changes, courtesy of the Money Advice Service.
There are several differences between the old payments and the new approach.
Universal credit is available for people who are in work and on a low income, as well as the unemployed, carers, and the sick or disabled, but now there will be a basic rate known as the ‘Standard Allowance’, with additional, extra amounts for people depending on their circumstances.
Other benefits such as child benefit and council tax benefit are separate from the changes, and the process is still means tested.
The change also opens up more opportunities for those who have previously been worried about taking up a short-term role – a few hours or days – for fear of losing their benefits.
The new system changes alongside the person’s circumstances so that if a claimant does start to pick up some work the payments will naturally go down, encouraging people to work wherever and whenever they can; and the new payment will be paid in one monthly lump sum.
That sum will contain elements relevant to each benefit strand – ie ‘housing costs element’ – but nonetheless it still comes as one payment. Claimants will need to set up a bank account, although help is available with this – this article in the Daily Mirror explains more.
The new system places a burden of responsibility on the claimant, especially those who currently rely on housing benefit being paid to their landlord for them. With Universal Credit, they will have the money paid directly into their account, and will be expected to pay rent from that sum. If both you and a partner are eligible, one combined lump sum will be paid.
Applicants will have to satisfy a number of criteria to get the credit, including accepting a Claimant Commitment – a document which lists what the claimant will do to prepare for work, find work, advance to better paid work, or work additional hours. None of these conditions should be unexpected for a job-seeker.
The credit only affects those of working age, so those with current Pension Credit will remain as they are. If a couple’s circumstances are different – one claiming pension credit and one not claiming – then you may both have to claim universal credit instead. Again, you will be notified on this.
Overall, as long as the recipients are well-prepared and have taken the necessary steps to prepare financially by setting up a bank account, and emotionally by resisting the urge to spend their money, then there should be a smooth transition.