Warning over ‘flawed’ universal credit plans

The government's plan to change the benefits system with the introduction of its universal credit plan is badly flawed and these faults need addre…

The government's plan to change the benefits system with the introduction of its universal credit plan is badly flawed and these faults need addressing, a new report has said.

A study by the Joseph Rowntree Foundation, published by the Centre for Economic and Social Inclusion, has noted a number of areas where it believes the new system could "trap people in poverty unless major flaws are ironed out".

It suggested the switch to single monthly payments could pose a "significant challenge" to families on low incomes who have to learn to budget in a different way.

The report also suggested "urgent clarification" is needed over the range and amount of financial advice people will get as they pass through the transition to the benefit. It added that this explanation will be needed regularly and that those concerning children should be treated separately.

It also called for a more prominent ombudsman and a review of the impact of the universal credit's key aims on localisation, with concern raised that people need to be well informed about how services are changing in their area.

One particular concern is that those using the service may be forced to begin their claims in debt after having to borrow money to cover the period before their first monthly claim is paid.

"In this key transitional stage, the Government needs to improve the availability of financial advice and support. The lack of clarity regarding such support and when services will be established gives much cause for concern," the foundation commented.

Speaking at the Conservative Party conference earlier this month, work and pensions secretary Iain Duncan Smith claimed the universal credit will help lift 900,000 people out of poverty, by encouraging them back into the employment market.

He noted that it will be withdrawn "at a constant rate" as people move off benefits and into work, so those taking up new employment can always know how much more their income is rising by for every hour worked.

By James Francis

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