New financial products are to be sought to help people who will be receiving the new Universal Credit.
The new benefit will roll up existing benefits, including Local Housing Allowance, into one.
LHA is paid to benefit tenants living in private rental accommodation. Private landlords have repeatedly expressed concerns that LHA tenants are unable to manage their own finances, with the result that they risk rent arrears.
Watchdog Consumer Focus said it strongly welcomes the Government’s announcement that it is seeking new financial products to help benefit claimants budget and manage their money.
Andy Burrows, head of post offices at Consumer Focus, said: “Our research shows significant need for budgeting bank accounts, often referred to as ‘jam-jar accounts’, to help people manage what will be a major change in how benefits are paid.
“Many people who could be badly affected by the introduction of Universal Credit do not have a bank account and without assistance may face real problems paying rent, utility bills and other essential payments.”
The housing benefit element of UC will be paid directly to the claimant rather than to the landlord. All UC payments will be paid monthly.
Consumer Focus research shows that 36% of UC claimants will be badly affected by the move to a monthly payment, and 30% by the direct payment of housing benefit to claimants.
Among those who say they will be badly affected, 58% say they will have to change how they budget; 35% say they will find it difficult to budget for groceries; and 34% say they will find it difficult to budget for energy bills and 16% to budget for rent.