The Government’s planned reforms of the benefits system begin today with the first payments of a new universal payment to replace a host of existing benefits.
Universal Credit merges the complex array of benefits that can currently be claimed into one monthly payment.
It replaces jobseekers allowance, income related employment and support allowance, income support, the child tax credit, working tax credit and housing benefit.
Universal changes: the Government's reforms of the benefits system are being launched today in Manchester.
The system is being trialled in Ashton-under-Lyne in Greater Manchester with the plan to eventually roll the programme out to nearly six million people nationwide.
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The reforms are the central plank of a benefits overhaul, which Work and Pensions Secretary Iain Duncan Smith and the Government says will ensure people are better off in work than on benefits.
It is also designed to simplify the welfare system by merging a number of benefits while reducing fraud and error in the system.
Some groups have raised concerns about the system’s reliance on a complex computer network which may not be ready or able to cope with millions of claims.
They are also concerned some many claimants might not have access to the internet.
Changes to the benefit system include the scrapping of the 16 hours a week ceiling below which people can work and still claim Jobseeker’s Allowance.
The Government believes 3.1million households will be entitled to more benefits as a result of Universal Credit, while 2.8million households will be entitled to less.
HOW THE CHANGES TO THE BENEFIT SYSTEM WORK
There will now be a single, monthly payment which the Government says mirrors the world of work, but charities say could create problems for personal money management
The benefits will include financial help to pay rent but will now be paid to the claimant rather than to a social landlord instead as under housing benefits rules currently.
Claims will be made and managed online only.
Benefits will be paid to a household rather than individuals in that household and will be paid directly into a bank account.
Benefits will be automatically adjusted to take account of any earnings. Employers will be required to enter details into a computer system to allow benefits to be adjusted in real-time.
It said most will see an average gain of £16 per month. The long-term cost to the Government is £100million in current prices.
Three other pilot projects - in Warrington, Oldham, and Wigan - have been delayed until July.
From October, newly unemployed people will make claims under the new system.
The Government plans to gradually shift all benefits and tax credits to Universal Credit from spring 2014, with the whole process completed by 2017.
Mr Duncan Smith said at the weekend that universal credit was being introduced over a four-year period because ‘I want to get these things right’.
He added: ‘We want to say to people, you're claiming unemployment benefit but you're actually in work paid for by the state: you're in work to find work. That's your job from now on: to find work.’
Labour's Shadow Work and Pensions Secretary, Liam Byrne, said universal credit was ‘a fine idea that builds on Labour's tax credits revolution’.
But he added: ‘The truth is the scheme is late, over budget, the IT system appears to be falling apart and even DWP [Department of Work and Pensions] ministers admit they haven't got a clue what is going on.’
The launch of the universal credit comes a day after Mr Duncan Smith suggested wealthy pensioners should give back universal benefits, among them the winter fuel allowance, free TV licences and bus passes, if they did not want to receive them.
His comments add to a growing number of calls for changes to universal benefits for the elderly, which began last year.
While he said there were ‘no plans’ to alter the rules for universal benefits, in an interview with the Sunday Telegraph, he said: ‘It is up to them, if they don’t want it, to hand it back. I would encourage everybody [who] doesn’t need it to hand it back.’
Mr Duncan Smith's comment's showed the deepening divisions within the Cabinet over universal benefits for the elderly. He found support in the form of the Deputy Prime Minister who also said yesterday that ‘very wealthy, maybe multimillionaire pensioners’ should make sacrifices.
But he rejected the idea of handing back benefit. Mr Clegg told the BBC: ‘I think the idea that in the meantime you give people benefits and say "oh by the way can you please give them back" I don’t think that makes sense.’
Ken Clarke, the Conservative minister without portfolio, who is 72, told Sky News: ‘You can’t hand it back to the Government. I don’t think it is a system for doing that.’
‘Every pensioner and retired persona like myself has to make up their own mind about whether they really need it and whether they are going to give it to some worthwhile cause.’
Elsewhere, Business Secretary, Vince Cable has previously questioned the wisdom of providing universal benefits to OAPs.
In an interview last month he said he had been receiving winter fuel payments for the last five years but that: 'I actually give it away. If we are in the realm of tough choices, why did we feel this area is a sacred cow?'
TIMETABLE OF SWITCH TO UNIVERSAL CREDIT
April 2013: First claims taken in Ashton-under-Lyne
July 2013: Delayed pilot schemes start in Warrington, Wigan and Oldham
October 2013: New claimants nationally move to universal credit
Spring 2014: Current claimants start shift from existing benefits to the new payment
2017: All claimants now on Universal Credit
The Prime Minister has already said that there will be no change to universal benefits during the life of the current Parliament.
But since last year the question of whether the Government will continue to support the universal payments - the winter fuel allowance amounts to between £100 and £300 a year - has refused to go away after a close ally of David Cameron, Conservative MP Nick Boles, called for the winding up of universal benefits to better off pensioners at the next election.
In a speech to the independent think tank last summer the Resolution Foundation, Mr Boles questioned why wealthy celebrities like Sir Paul McCartney and Lord Sugar should receive winter fuel payments.
But in February Downing Street refused to say whether this would remain the case after the next election in 2015.
A Downing Street spokeswoman said: ‘We have done an awful lot to help pensioners, but clearly, speaking generally, there are some difficult decisions to be made.’
She added: ‘What (the Prime Minister) set out in terms of benefits for pensioners that was set out in the Coalition Agreement for this Parliament, he absolutely stands by that. But broader decisions around the spending review have yet to be made.’
Earlier this month Mr Duncan Smith ran into trouble when he suggested he could live on £53 a week after a caller into a phone in show said this was the amount of money the Government would leave him to live on.
The Work and Pensions Secretary's comments sparked an online petition which receive 400,000 signatures challenging him to do so. The petition drew an angry response from Mr Duncan Smith who dismissed the petition as a stunt.
'This is a complete stunt which distracts attention from the welfare reforms which are much more important and which I have been working hard to get done, he told a local newspaper in his north east London constituency of Chingford. 'I have been unemployed twice in my life so I have already done this (lived on the equivalent of £53 a week).'
'I know what it is like to live on the breadline', he told the Wanstead and Woodford Guardian.
Other reforms to welfare include launched this month include the introduction of a £26,000 cap on the amount of benefits a household can receive, cuts to housing benefit for working-age social housing tenants whose property is deemed to be larger than they need and the replacement of disability living allowance by the personal independence payments.
Working-age benefits and tax credits are also rise by 1 per cent - a below-inflation cap