Universal Credit: What You Need to Know

17th February 2015

By Lyndsey Hall

The government began a phased roll-out of its new Universal Credit on Monday, with the aim of all recipients of benefits in England, Scotland and Wales being on the new credit by 2016. After a series of delays, the new benefit has been introduced at a further 150 job centres today, following a pilot at 100 job centres across Britain which began in April 2013.

There has been plenty of criticism from the Labour party, which called it a ‘failing programme’ that would take years to implement, and the National Audit Office, which accused the scheme of being badly managed and failing to deliver on its targets. However, Work and Pensions Secretary Iain Duncan Smith has said that the roll-out of Universal Credit will cost £600m less than expected and is now being implemented gradually over the next year.

The new Universal Credit replaces Jobseeker’s Allowance, Income Support, Employment and Support Allowance, Working and Child Tax Credits and Housing Benefit. Around 50,000 people have claimed the benefit since the pilot began in 2013; far fewer than originally estimated. The phase currently being rolled out is for single claimants only; eventually couples and then families will be transferred to Universal Credit. However, by the time the scheme has been fully implemented, the benefit will still only be offered at one in three job centres.

The idea behind the new benefit is to remove the old ’16 hour rule’, whereby benefits claimants often ended up with less money once they found a job. Under the new scheme, you will always be better off in work than unemployed, as there are no limits to the number of hours you can work a week if you receive Universal Credit, and once you start earning £111 a week, or more if you have children, the benefit will reduce gradually.

The cap is set at the average working household’s take-home pay, which is considered to be £2,167 for couples and single parents, or £1,517 for single people. The benefit will be paid monthly, rather than fortnightly as it is currently, with the intention of smoothing the transition for claimants when they do find a job. Housing Benefit, which has previously been paid directly to the claimant’s landlord, is now included in the Universal Credit; meaning benefits recipients will now have to pay their rent in the normal way as well.

The government estimates that Universal Credit could boost the economy by £7bn per year as more people get into work and less money is spent on benefits.

What do you think about the new Universal Credit? Do you think the change will be for the better, or is it just a huge waste of taxpayers’ money? We’d love to hear from you, leave us a Comment or get in touch on Facebook or Twitter.

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