Claimants 'fear' Universal Credit

ATMMore than 2.7 million benefit recipients will struggle to cope with managing their money when the Government's flagship welfare reform scheme is rolled out, research for the Payments Council has suggested.

The changes under Universal Credit will streamline several benefits into one simplified payment and mean that many people will receive a lump sum once a month, rather than getting their money on a weekly or fortnightly basis under the current system.

Claimants will also see housing benefit paid into their bank account instead of going directly to a landlord or housing association.

But around half of people (48%) surveyed who are eligible for Universal Credit think the reforms will make it harder to manage their finances, with many people fearing they will sink into debt or fall behind with their rent.

The Payments Council estimates from its research that 2.7 million of the 5.7 million working age people on benefits could struggle to balance their budgets as the scheme rolls out.

The Payments Council, which is responsible for making sure that payment services work in the UK, surveyed more than 1,500 people who will be moved over to Universal Credit, which will eventually replace income-based jobseeker's allowance, i ncome-related employment and support allowance, i ncome support, w orking tax credit, c hild tax credit and h ousing benefit.

Some 45% of those surveyed fear they will rack up extra debts because of the changes and 47% worry they will struggle to pay bills and rent on time.

Universal Credit is currently being piloted in four areas around Manchester. New claimants in Hammersmith, Inverness, Rugby, Harrogate, Bath and Shotton are moving over to Universal Credit from this month.

Previous fears for how people will cope were raised by affordable housing firm Circle Housing Group, which warned that people with little internet access are particularly in danger of falling into arrears. Most people are expected to manage their claims online under the plans.

The reforms aim to simplify the existing system and make it more cost-effective to run as well as making it easier for people to return to work.

But a scathing report from the National Audit Office recently found that some £34 million has already been written off as IT systems are set up to deal with the changes.

The Department for Work and Pensions' senior civil servant Robert Devereux has previously admitted that the controls in place for the programme were not ''remotely acceptable''.

The Public Accounts Committee was told last month that the troubled project could still be delivered by 2017 as planned.

Adrian Kamellard, chief executive of the Payments Council, said: "The introduction of Universal Credit means that people will have to be savvier about managing their money and will have to plan for the whole month instead of budgeting on a weekly basis."

The Payments Council's consumer education campaign Pay Your Way has advice to help people manage their budgets at its website