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Universal Credit

What is it?

Universal Credit is a new single payment for people looking for work or on a low income. It has been brought in to assist claimants and their families in becoming more independent and to simplify the benefits system.


How does it work?

The Universal Credit will bring together a range of working-age benefits into a single streamlined payment. The aim is to reduce the cost to the economy by making the system easier to administer and cut back on fraud or errors whilst also improving work incentives with a view to smoothing out the transition into and out of work..


When is it launched?

It will be launched in the North-West of England in April 2013 in line with other changes outlined in the Welfare Reform Act 2012, replacing;

- Income-based Jobseeker’s Allowance

- Income-related Employment and Support Allowance

- Income Support

- Child Tax Credits

- Working Tax Credits

- Housing Benefit

The plan is for Universal Credit to go live across the rest of the country later in 2013. New claimants will be able to make claims for Universal Credit from October 2013 whilst existing benefits and credits are gradually phased out. From April 2014, all new claims will be for Universal Credit.

The pathfinder programme will be launched April 2013 in Tameside, Oldham, Wigan and Warrington.


Who does it affect?


Anybody claiming any of the above benefits/credits will move onto Universal Credit using a phased approach which is expected to be completed by the end of 2017. Predictions state that as many as 350,000 children and 500,000 working age adults will be moved out of poverty as higher entitlements, along with those currently unclaimed begin to be paid.

Claimants will be better off in work including irregular work whilst on the Universal Credit.

The government will provide transitional cash protection for those whose Universal Credit award would be less than it was under the old system to ensure there are no losers. The DWP have set out guidelines on this.


What do claimants have to do?

In return for receiving financial support, out of work claimants, depending on their circumstances, must look for work, or take steps towards it. In most cases they will attend periodic interviews and must be willing to take up work immediately.

Claimants are asked to accept a claimant commitment to demonstrate their responsibility and a refusal will result in the loss of entitlement to Universal Credit.

Payments for the Universal Credit will be paid monthly to reflect the world of work and to help people budget effectively, this will be a big change for those on weekly, fortnightly or 4 weekly payment schemes.

What about other benefits?


- Disability Living Allowance will be replaced by Personal Independence Payment from 2013.

- Council Tax Benefit will be abolished in April 2013 and replaced by a system of localised support.

- Pension Credit will be amended from October 2014 to include help with eligible rent and dependent children.

- Social Fund is also being reformed to introduce new local assistance.

How does it affect landlords?


For those landlords currently receiving payments directly from the DWP you may be able to continue as the DWP highlights that some claimants will not be capable of managing a monthly payment. Pensioners are excluded and residents of ‘exempt’ supported housing, both groups of tenants can still have direct payments made to landlords.

A category of tenants will be identified as vulnerable and those falling into this category will be eligible to have payment made direct to landlords. As of yet the parameters of this category have not been set and groups are urging the government to include tenants with credit and debt problems in the category.

Projects have been launched to test how 12,000 claimants can manage monthly payments of Housing Benefit ahead of the introduction of Universal Credit and to highlight appropriate levels of safeguards. Results of the projects have highlighted some early problems including poor access to information for landlords assessing tenants’ readiness for direct payment and a general lack of awareness amongst tenants of benefit reforms.

How does it affect landlords?


- Talk to your tenants, as with all relationships the key is communication. Make sure they know about the changes coming in and ask them to honestly think about the monthly payments and their budgeting abilities.

- Confirm the date of monthly payments to your tenants and make adjustments to rental due dates where necessary (aim for the same day or the day after to limit risk).

- Take out Rent Guarantee Insurance for your property to provide an extra safeguard.

- Talk to your local authority about direct payments and keep checking with them for the list of ‘vulnerable’ tenants.

Article by Alex Hargreaves for makeurmove.co.uk



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