How will Universal Credit affect me? Amount payment could change by on new benefits system

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Universal Credit is a payment which may be made in order to help with one’s living costs, should they be on low income or out of work. It is currently available for new applicants or those who have had a change in circumstances. Universal Credit is set to replace six types of other benefits, known as legacy benefits. These are: Child Tax Credit, Housing Benefit, Income Support, income-based Jobseeker’s Allowance (JSA), income-related Employment and Support Allowance (ESA), and Working Tax Credit.

The Department for Work and Pensions (DWP) announced earlier this year that the process of moving current benefits recipients onto Universal Credit would be trialled ahead of it being rolled out across the UK.

This pilot scheme of the move, known as “managed migration”, was due to take place in July 2019 in Harrogate, North Yorkshire.

Earlier this week, the Work and Pensions Committee (WPSC) released a new report on the welfare reform, titled Universal Credit – natural migration.

The select committee’s report said that, according to estimates by the Resolution Foundation, compared the the legacy system, three million families entitled to legacy benefits stand to lose out under Universal Credit.

The remaining 2.4 million working families who are entitled to legacy benefits will gain in entitlement, it is estimated.

Zoe Charlesworth, Policy and Product Manager at Policy in Practice, told the Committee that those who see a drop in entitlement could lose, on average, £59 per week.

This could work out at around £3,000 less per year.

Meanwhile, it’s estimated that those who gain from the new system could see a rise of £44 each week, on average.

Frank Field MP, Chair of WPSC, said: “In the history of humankind, has there ever been an example of a Government introducing a fundamental welfare reform and none of its employees being able to tell if it will leave people better or worse off?

“Hardly surprising that baffled and anxious claimants are finding themselves trapped in what the Department chillingly calls the ‘lobster pot’ of Universal Credit, and with much less to live on as a result.

“The UC application page needs to come with a health warning, and anyone who gets inadvertently caught in DWP’s lobster pot should be compensated.”

A DWP spokesperson said: “Universal Credit helps people into work faster than the old system and provides targeted support.

This could work out at around £3,000 less per year.

Meanwhile, it’s estimated that those who gain from the new system could see a rise of £44 each week, on average.

Frank Field MP, Chair of WPSC, said: “In the history of humankind, has there ever been an example of a Government introducing a fundamental welfare reform and none of its employees being able to tell if it will leave people better or worse off?

“Hardly surprising that baffled and anxious claimants are finding themselves trapped in what the Department chillingly calls the ‘lobster pot’ of Universal Credit, and with much less to live on as a result.

“The UC application page needs to come with a health warning, and anyone who gets inadvertently caught in DWP’s lobster pot should be compensated.”

A DWP spokesperson said: “Universal Credit helps people into work faster than the old system and provides targeted support.

“Around one million disabled households will gain an average of £100 more a month, and changes to work allowances mean 2.4 million households will be up to £630 per year better off.”

Last week, Chris Bryant MP pleaded with the new Prime Minister Boris Johnson to look into the five-week waiting time for Universal Credit claimants getting their first payment.

Speaking in the House of Commons, he said how recipients can get a “100 per cent advance on Universal Credit on day one”.

The Gov.uk website explains that this interest-free loan must be repaid from the first Universal Credit payment, with the full amount being paid back within 12 months.

Mr Johnson also said: “200,000 people are going to be lifted out of benefits and into work thanks to Universal Credit, and it has added massively to the incomes of 700,000 families across this country.”

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