Benefits Expert: ‘What is Universal Credit?’

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Q I hear the Government is bringing in a new benefit called Universal Credit. What is it and who is it for?

A Universal Credit is a new way of giving financial help to working-age people on low incomes, whether they are in or out of work.

Under the present system people with low incomes may receive two or three different benefits.

These benefits are paid separately at intervals of a week, a fortnight or four weeks.

Someone who is not working, for example, may receive Income-based Jobseeker’s Allowance or Employment and Support Allowance for their day to day expenses, plus Housing Benefit for their rent.

A non-working lone parent may receive Income Support for themselves, Child Tax Credit for their child, as well as Housing Benefit.

A worker with a family may receive Working Tax Credit for being on a low wage, Child Tax Credit for the children and Housing Benefit towards the rent. Under the new system all these benefits will be replaced by one single benefit called Universal Credit.

There will be just one payment, paid once a month.

Q Why does the Government think that Universal Credit will make things better for people on low incomes?

A The benefits that Universal Credit will replace are based upon your income.

They go up and down depending upon the changes in the money you have coming in. If you receive two or three different low-income benefits, a change in your income may affect all of them.

So if your income goes up because you start work, you may not know how much better off you will be overall.

It also takes some time after you have reported the change before your benefits are re-assessed.

As Universal Credit is just one benefit paid once a month, it will be easier to understand how a change in your situation will affect you.

Your benefit should be adjusted more quickly too.

If you have been unemployed and start work, or you are working and have a pay rise, your Universal Credit will probably be reduced. But what you gain in earnings will always be more than you lose in benefit. The Government has said that people will be sure to keep £0.35 out of every extra £1 that they earn.

Q When is Universal Credit being introduced?

A Universal Credit will start to take new claims from unemployed people in October

2013. For people in work this process will begin in April 2014. The remainder of current claims will be moved to Universal Credit from 2014, with the process being complete by 2017.