Universal Credit Rollout

From end of March 2018, the new Universal Credit benefits system is being rolled out in the London Borough of Barking & Dagenham. This follows the introduction of this system in a number of other London Boroughs.

The Universal Credit payment will replace means tested working-age benefits and tax credits including Income Support, Income based Job Seekers Allowance, Income based ESA, Housing benefit, Working Tax credits and Child Tax credits. It will affect many people in Barking & Dagenham who currently receive these benefits.

While the idea of Universal Credit, making it ‘pay’ to be in work and simplifying the sometimes complex benefits system is a sound one, DABD, as an organisation that supports hundreds of vulnerable residents understand and claim their benefit entitlements every month, we are concerned about the new system.

One of the main changes with Universal Credit is how it will be paid. Rather than a fortnightly or weekly payment, Universal Credit will be paid as a once a month payment. The once a month payment is meant to align more with how wages are received – preparing claimants for the world of work.

Those who receive help paying their rent under the old system receive it as a separate payment. Under Universal Credit, most claimants will be required to pay their landlord directly out of the single payment they receive.

These changes will require people receiving Universal Credit to manage their money effectively and could well lead to debt issues where people are unused to or unprepared for receiving their payments in this way.

From our calculations based on the current available figures, it looks initially as though there will be more losers than winners under the new system although until it rolls out completely it is difficult to say for sure.

Two groups that particularly concern us are young people, especially those under 25, and disabled people who stand to be worse off under the new system.

For example using the current figures available a young person under 25 with a six month old child could be £1,300 worse off per year on Universal Credit than on the previous benefits system before cuts have been made.  If that person is working 16 hours on minimum wage, this could increase to £1,900 worse off.

For disabled people some Disability Premiums will no longer exist (which are currently attached to Income Support, Income based ESA and Income based Jobseeker’s Allowance) under Universal Credit which means that disabled people may also find they are worse off.

We fully expect to receive a sharp increase in calls to our organisation while the system rolls out. We will also be watching with interest to see how many households in Barking & Dagenham are affected and how this will impact on their already stretched incomes in a Borough with a long-standing issue of deprivation