Universal Credit? WTF? (What’s The Fuss?)
It’s all change for most working age benefit claimants as Universal Credit (UC) is brought in over the next few years to replace:
- Income Support
- Housing Benefit
- Working and Child Tax Credits
- Employment and Support Allowance (ESA)
- Jobseekers Allowance (JSA)
What’s different? Everything.
UC is paid monthly in arrears. Claimants receive one payment, not only for each of the benefits listed above, but for all claimants living at the same household. The claim has to be managed online and you’ll need a bank account that can take electronic payments in and, preferably, handles automatic payments out, like rent payments to your landlord.
Here’s the thing, in early trials, four in five (79%) UC claimants in social housing were in rent arrears by the time they receive their first payment.
Hopefully, you’ll be reading this well in advance of moving onto Universal Credit because the best advice is to get plans in place as early as possible. Sadly, lots can get in the way of a smooth transition but the more that you have in place, the easier it is to give DWP all they need to get your claim set up.
Levels of service: Some areas have the ‘Live’ service, which does not offer all the functions of the ‘Full’ service that should be in place everywhere by the end of 2018. You will be a Full service customer if you manage your claim online, using it to report changes, send messages to your work coach and find support.
The pitfalls, the 3 Bs
Clean Slate works closely with UC claimants and they tell us that moving over to the new benefit system is not always very easy. In fact, they say that the more you’re struggling with your money before you transfer to UC, the more likely it is that you’ll need help.
Banking: You will need a bank account or similar that allows you to receive electronic benefit payments. Ideally, you will be able to make direct debit and standing order payments, which means your rent can be paid automatically without you worrying about it. If you have a bad credit history, most people can still get a Basic Bank Account but you need to know what you’re asking for. You also need ID, which you might need to make your UC claim too, so it’s worth getting this organised as early as possible.
Budgeting: UC claimants receive any of all the six benefits listed above in one monthly payment and in arrears. This includes your rent money, if you previously claim Housing Benefit, and claimants say their biggest challenge is keeping this safe when there are so many things to pay out for. UC takes a while to set up and because it’s paid in arrears, there is a minimum 6-7 week wait for the first payment but many report waiting 3 months. To stay on top, it is best to plan a budget – all your money coming in and going out each month. You may find you need to cut back or, if there’s time, start saving to tide you over while awaiting the first payment. Saving regularly with a credit union (who may help you with a budget) could mean you could get a small loan to help you through the weeks without payment.
Being Online: Now, if you’re here, you should be okay but spread the word because another shock for many was that to claim and manage UC, you have to be online. You will need an email address and know how to use it. You will need access to a PC, a tablet or a smartphone (although forms on these are fiddly) and you’ll need to know how to use these too. If you need help, find your local UK Online Centre, who will not only help you learn how to use a computer and the internet but can often help you organise your online Universal Credit account.
Better Off In Work
A key feature of Universal Credit is that it promises to ensure you’re better off in work. If you have dependent children living with you, anything you earn up to £192 or £397 (depending on whether you are claiming Housing Benefit) is yours to keep over and above your UC payments. After that, you lose 63p for every pound you earn as it is deducted from UC. If you don’t have children, for every pound you earn 67p is deducted from UC but it means you should always be better off when you work.
This is particularly good news if you’ve been hit by the spare room subsidy rules. If that were costing you, say, £14 a week, and if you don’t have kids at home, by taking a few hours’ work and earning £38, you’ll cover the Bedroom Tax at least. It’s complex but it should work for everyone.
There is some help out there if you know where you look and you’re prepared to ask for it. The starting point is probably DWP themselves but you have to know what you’re asking for. Again, our Guide has more details but you could be entitled to an advance payment, a budgeting advance, a budgeting loan or hardship payment. If you can prove monthly payments in arrears going to one person for the whole household will cause you hardship, an Alternative Payment Arrangement may be available. Same if you can show payments to you for your rent, instead of straight to your landlord, will cause problems.
DWP numbers for Universal Credit enquiries, Monday to Friday, 8am to 6pm:
Full service: 0345 600 4272
Live service: 0345 600 0723
Textphone: 0345 600 0743
Welsh language: 0345 600 3018
From landlines, calls cost up to 9p per minute. From mobiles, calls cost from 3p to 55p per minute, depending on your network.
You’ll need your National Insurance number to hand. If you don’t know your NI number, it’s worth looking it up. Click here for more information.
Your local council may have a welfare support team or you may be eligible for a Discretionary Housing Payment. Speak to them and, if you’re in a housing association place, speak to them as soon as possible about what help is available.
For all the above, Citizens Advice can help you further, alongside any local advice agencies. Claimants also told us it’s an idea to know who else you could turn to if things get bad: who you could ask for a lift or leave the kids with, or even where to turn when the cupboards are bare, like the foodbank.
Getting All You’re Worth
All claimants moving onto UC should do an online benefit checker and also a ‘better off calculator’ to look at how getting some paid work would affect things. Remember, UC replaces six of the biggest benefits but others are still claimed separately, such as Child Benefit and Council Tax Reduction (or support). Go to www.turn2us.org.uk
How is it worked out?
A computer system will take into account all your circumstances and come up with what the Government believes to be a fair amount for you to receive. It should be similar to any money you are getting now.
Universal Credit will be paid directly to you monthly, probably in arrears. So if you’re used to getting your housing benefit paid directly to your landlord, you’ll have to make new arrangements to make sure your rent is paid.
What should I do now?
You’ll find it a lot easier to manage your Universal Credit if you have a bank account. See Money Advice Service's advice for opening a basic bank account. If you don’t have a bank account when Universal Credit is introduced you’ll be given your benefits via a Paypoint card that you can use at anywhere showing the Paypoint logo.
It’s worth getting online. The Government wants to administer Universal Credit online where it can. If you are not online you may find it more difficult to get the benefits you are entitled to.
Universal Credit will be paid monthly, which means your budgeting skills need to be tip top. See Quids in!'s advice here.
- Citizens Advice
- Factsheet by Child Poverty Action Group
- Rethink Factsheet
- Benefits Calculator
- The Mirror: 5 Things You Need to Know About UC
- Intro video from the DWP
- Official Government information
- Money Advice Service information
- Turn2us guide to Universal Credit
Take a look at Learn My Way's online UC Guide which Clean Slate contributed to. Check out the guide here.
For the latest information on UC, sign up for the Quids In Readers Club which features their regular UC Watch column.
Click here to buy the Quids in! Universal Credit Guide online.