Universal credit is a welfare benefit program started in the UK in 2013 to replace the 6 means tested benefits and credit cards. The national launch was set for October 2013 for new claimants (excluding those with complex cases like families with children) though a pilot in 4 local authorities preceded this.
The transition was set to be gradual and to be completed by 2017. While this was the case, only one of the original pilots went ahead as scheduled due to persistent delays in implementation and IT failures. The other three pilots took off later that summer and were met by numerous criticisms.
Ian Duncan Smith, the secretary of Work and Pensions is the one that proposed the Universal Credit in 2010 at the Conservative Party annual conference. The aim was to ensure that it is implemented in the span of 4 years and two parliaments with the intention of merging the already existing 6 means tested tax credits and benefits into one monthly payment and to reduce costs as well. The six benefits include the following:
- Income based Jobseekers Allowance
- Income related Support
- Employment Allowance
- Income support
- Working Tax Credit
- Child Tax Credit and Housing Benefit.
Unlike existing benefits like Income Support that have a 100 percent withdrawal rate, the Universal Credit will be tapered away gradually as is the case with existing Housing Benefit and tax credits so that in theory, people are able to still take part time jobs and at the same time, be allowed to retain some of the money they receive.
Universal credit payment would also be paid in a different manner from the current benefits. Some of these include the following:
- The money will be paid directly into the account you choose
- If one gets assistance with rent, the same will be included in their monthly payment so they can pay the landlord
- In cases where both partners are eligible for Universal Credit, they will get one payment set for the household.
There are 4 conditionality’s for claimants depending on circumstances ranging from whether they are required to search for full time employment to their inability to find work at all (this includes people in the unconditional group such as carers and the severely disabled)
Universal Credit payment will be done once every month directly into a building society’s or bank account. Any assistance with rent will also be included in the payment so that claimants can pay their landlords directly.
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