UNIVERSAL Credit policy is one of the most controversial policies rolled out by the Conservative Government since it came to power in 2010.
Supporters say it is simpler than previous system, but critics argue it can leave some worse off and new claimants with no income for weeks. Here’s the lowdown.
What is Universal Credit?
Universal Credit is a new welfare scheme designed to wrap a number of benefits – such as jobseeker’s allowance, in-work tax credits and housing benefit – into a single monthly payment.
It was piloted in some areas before being rolled out across the country.
The Government had said that three million working households would see cash gains from Universal Credit.
Treasury officials said a couple with two children where one parent earns £30,000 a year would benefit by £425.
A single parent with one child and no housing costs earning £15,000 a year will get £170 more, officials claimed.
These differences are due to a change in something called the taper rate, which came into effect in November 2017.
Universal Credit replaces the following benefits:
- Child Tax Credit
- Housing Benefit
- Income Support
- Income-based Jobseeker’s Allowance (JSA)
- Income-related Employment and Support Allowance (ESA)
- Working Tax Credit
If you receive any of these benefits, you can’t claim Universal Credit at the same time. Claimants will be moved to Universal Credit instead when it is introduced in their area.
Whether you can claim Universal Credit depends on where you live and your circumstances.
What changes have been introduced?
From April 2018 those already on Housing Benefit continued to receive their award for the first two weeks of their Universal Credit claim. This money will not have to be returned.
The government will also make it easier for claimants to have the housing element of their award paid directly to their landlord.
In May, ministers softened the rules so claimants who would have seen their benefits cut get more support when they switch to the new regime.
Those affected by the rule tweak will include working parents, the disabled and jobseekers who find work but lose it again.
It’s likely to mean thousands of Brits getting hundreds more pounds a year in benefits.
And many more who lost out will get money back.
At the end of 2017 it was announced that Universal Credit claimants would only face a wait of five weeks, as opposed to six.
It followed an outcry from claimants who said they were left penniless while their claim was processed.
In 2018 work and pensions secretary Esther McVey defended the new benefit system amid reports 3.2 million households will lose more than £2,000 year.
She told the BBC some people would lose out because the government had made “tough” spending decisions in 2015, but insisted the most vulnerable would be protected.
She said: “I have said we made tough decisions and some people will be worse off.”
What is the taper rate?
The government plans to put cash back in the pockets of working families by lowering the all-in-one benefit’s taper rate from 65 per cent to 63 per cent.
The taper rate is the amount of money that gets deducted from your benefits when you earn over a certain amount.
So before, everyone earning above a certain threshold from their job would lose 65p from every pound of benefits cash they were able to claim over that amount.
But now, workers will lose just 63p – 2p less – for every pound they earn above their work allowance.
The work allowance is set at £198 a month – or £409 a month if you don’t receive help with housing costs – meaning it amounts to either £2,376 or £4,908 a year.
How can families get a boost to their benefits after further changes were introduced?
On April 27, it was announced the limit on child benefit will no longer apply to families who adopt children or look after relatives.
The U-turn from the Government comes after a High Court judge ruled ministers were breaching human rights laws, as he said it was unfair that the exemption for adopted children only applies to certain families.
It will bring a boost of £231.67 per child for every Universal Credit claimant affected.
Currently, a family can only claim cash for their first two children – not for the third or any more.
But if a family with two children goes on to adopt another, they are entitled to an increase in benefits.
Work and Pensions Secretary Esther McVey announced that from April 2018, the same rule will apply to all families with adopted kids – even if they adopted a child first, then had a biological third child later.
The rule change also apply to people who look after their relatives’ children, but it will not apply to stepchildren as long as they are still living with one of their biological parents.
Ms McVey said: “Adoptive parents and non-parental carers – known as ‘kinship carers’ – have often stepped in to help a family member or close friend in times of need. They have provided support and provided a home for a child in need.
“It is therefore right that Government supports them in doing so. That is why today I am extending the existing support for children and families in these circumstances.”
Who can claim Universal Credit?
Currently, Universal Credit is mainly claimed by the unemployed, or those on a low income.
The benefit will replace jobseeker’s allowance, employment and support allowance, income support, working tax credit, child tax credit and housing benefit by March 2022.
Universal Credit has previously been criticised for lengthy delays to benefit payments, with a third of families having to wait six weeks for their first instalments.
However, Chancellor Philip Hammond announced in the Autumn Budget that the government would pour £1.5billion into reducing the waiting time by seven days.
Roll-out of the Government’s flagship welfare reform programme is expected to take place in 50 Jobcentres.
By 2022, it is expected there will be a full roll out across the UK.
For information about whether you can claim, visit Citizens Advice.
Who introduced Universal Credit?
Former Work and Pensions Secretary Iain Duncan-Smith announced the introduction of a Universal Credit in 2010 designed to simplify the benefits system and improve work incentives – making it the landmark policy of his time in government.
But the programme was cut by around £3.4billion under Chancellor George Osborne five years later, which led to Duncan-Smith dramatically quitting his post.
David Gauke, who led the DWP before being moved to Justice Secretary, announced a major expansion of the flagship welfare programme.
How have MPs reacted to the Universal Credit?
Iain Duncan-Smith, who lead the fight against the cuts after resigning from the Cabinet over them, welcomed the move.
The former Tory leader told The Sun: “Putting money back into Universal Credit is a very welcome U-turn, and I’m very pleased Theresa and Philip have listened to us.
“It is a very good start to make work pay again. In future, I hope we have a chance to go further and put the money back into it.”
But critics said the Universal Credit reform failed to compensate for the losses low-paid workers will face from previously-announced cuts.
What to do if you have problems claiming Universal Credit
IF you’re experiencing trouble applying for your Universal Credit, or the payments just don’t cover it, here are your options:
Apply for an advance – Claimants are able to get some cash within five days rather than waiting weeks for their first payment. But it’s a loan which means the repayments will be automatically deducted from your future Universal Credit pay out.
Alternative Payment Arrangements– If you’re falling behind on rent, you or your landlord may be able to apply for an APA which will get your payment sent directly to your landlord. You might also be able to change your payments to get them more frequently , or you can split the payments if you’re part of a couple.
Budgeting Advance – You may be able to get help from the government to help with emergency household costs of up to £348 if you’re single, £464 if you’re part of a couple or £812 if you have children. These are only in cases like your cooker breaking down or for help getting a job. You’ll have to repay the advance through your regular Universal Credit payments. You’ll still have to repay the loan, even if you stop claiming for Universal Credit.
Cut your Council Tax – You might be able to get a discount on your Council Tax or be entitled to Discretionary Housing Payments if your payments aren’t enough to cover your rent.
Foodbanks – If you’re really hard up and struggling to buy food and toiletries, you can find your local foodbank who will provide you with help for free. You can find your nearest one on the Trussel Trust website.
In September 2017 as the plans were being rolled out Tory rebels called for a halt.
Twelve MPs wrote to the Work and Pensions Secretary David Gauke demanding a pause in the roll out of the welfare reform reported the Daily Telegraph.
Rebels feared the change could be as damaging to the party as the Poll Tax reporting concerns that claimants were missing out on money when they switched from their existing benefit to the new one.
But defiant Theresa May insisted the roll out of the credit would continue as it was the “right thing to do.”
Shadow Chancellor John McDonnell to suggest it should go entirely – declaring: “The reforms haven’t worked.”
It was revealed earlier this week that ministers were aware that Universal Credit changes would leave poor families £200 worse off.
The Institute for Fiscal Studies has previously estimated 2.1 million families will lose while 1.8 million will gain.
What U-turn did the government make on Universal Credit?
On Wednesday, October 18, 2017, Work and Pensions secretary David Gauke announced the controversial 55p-a-minute charge for people calling to get help would be scrapped.
All charges will be abolished by the end of the year after PM Theresa May was grilled over the issue by opposition parties.
The universal credit helpline was an 0345 number, charged at a local rate, but had sparked fury from members of the public who believed it should cost nothing to get help.
It was changed to a freephone number.