Claimants of the new Universal Credit will be given support in the form of new financial products, the Government has announced.
What is Universal Credit?
Universal Credit will see a number of existing benefits, such as Local Housing Allowance, merged into one.
At present, Local Housing Allowance is paid to tenants claiming benefits in private rented accommodation. This process had led to repeated concerns from landlords that tenants are struggling to manage their finances. In turn, this has led to many facing rent arrears.
Watchdog group Consumer Focus has welcomed the announcement. Andy Burrows, head of post offices at Consumer Focus, said that the move would aid claimants to properly manage their finances. He said that, ‘our research shows significant need for budgeting bank accounts, often referred to as jam-jar accounts to help people manage what will be a major change in how benefits are paid.’
He went on to say that it was crucial that assistance is given to those receiving Universal Credit, saying that, ‘people who could be badly affected by the introduction need help as those, ‘without assistance may face real problems paying rent, utility bills and other essential payments.’
Universal Credit tenants helped to manage money
The introduction of Universal Credit will see the housing benefit part of the payment given directly to claimants and not landlords. All Universal Credit payments will be provided on a monthly basis.
Research from the Customer Focus group shows that 36% of Universal Credit claimants will be adversely affected by the switch to monthly payments. 30% said that they were struggle with having housing benefit being paid directly to them.
Of those who claim that they could be adversely affected, 58% said they would have to change their budgetary plan. Furthermore, 35% said that they could potentially struggle to budget for basic groceries, 34% for energy bills and 16% for rent.