Universal Credit

By 2022, anyone who is working age and claims the benefits below will be moved to the new system called Universal Credit: Income Support, Housing Benefit, Working and Child Tax Credits, Employment and Support Allowance (ESA), Jobseekers Allowance (JSA)

In theory, it’s simpler, with one benefits instead a mix of these six, and most people will have no problems, but many people have struggled. So we asked claimants who were first to move onto Universal Credit how they’d found it.

Here’s what they told us:
(Click the topic to expand)

The Key Issues: How Universal Credit (UC) is Different From the Old Welfare System 

Almost everything is different about Universal Credit (UC) compared to the old system:

  • It is paid monthly, in arrears, and the first payment is at least five weeks after you make your first claim
  • Payments include any housing costs that Housing Benefit used to cover, so you become responsible for ensuring rent is paid
  • Claimants receive one payment, not only for each of the benefits listed above, but for all claimants living at the same household
  • The claim has to be managed online
  • Almost all claimants will need a bank account that receive electronic payments and, if you’re wise, handle direct debits so you don’t need to keep thinking about rent payments and the bigger bills
  • When working, you don’t lose your benefits pound for pound, there is a ‘tapered’ approach and some people can earn over £409 before anything is deducted from UC payments
The 3 Bs: The Quids in! Rule of Thumb for Avoiding the Pitfalls

The biggest pitfalls claimants tell us are around their Banking, Budgeting and Being online. Looking through the big issues above you can see why we’ve arranged some help under the 3 Bs… or the three bees you’ll see hovering around this page. In a way, they want to bug you into action because nothing will sting you worse than not being prepared in advance of moving across to UC.

The three bees also star on our Guide to Universal Credit, a 32-page walk-through of the system – ask you landlord or local council if they have free copies. Otherwise, you can buy a copy here.

As a rule of thumb, if you have the right bank account (Banking), check you will have more coming in than going out – and what to do if you won’t (Budgeting), and know where and how to use a computer and the internet (Being online), you’re more likely to be fine.

And if you’re any the six benefits listed above, start putting those things in place now. Try not to become one of the four in five (79%) Universal Credit claimants who, in early trials, were in rent arrears by the time they receive their first payment.

Read more about the message of the 3 Bs.

Promises Promises: Is the New System Really Better, as the Government Says it is?

Universal Credit makes two big promises:

  • “The system is simpler”: Like anything new, it certainly doesn’t feel like it to start with. The jury is still out on whether it gets simpler over time
  • “Everyone will be better off in work”: Campaign groups say there will be groups who are worse off but while the old system would deduct almost anything you earned off your benefits, Universal Credit does this more slowly, taking 63p off your benefit for every pound you earn. People with children or extra challenges to getting work have an allowance that allows them to earn a certain amount before anything is deducted. Initial research suggests most workers will be better off as they take on a job but we are watching this closely.

Read more about better off in work.

10 Things You Need To Know: What Claimants Know Now That They Wish They Knew When They Started

Below are the ten headlines Universal Credit claimants told us to pass on. Have a think about which ones might apply to you. If they do, follow the links for more information. And remember, don’t panic! There are people who can help and it’s easer when you go into things with your eyes open, which is probably the best advice we could give you about Universal Credit.

  1. COMPLEX CASES
    The worst thing we’ve heard is that the more problems someone has, the more likely it is that the computer will say ‘no’! Anyone who needs or receives support for health or housing issues, for example, should talk to a support worker and see if they can organise extra help. Too many complex claims have ‘tripped’ and had to be restarted, causing delays to the first payment… of a month or two or more
  2. BANKING ON IT
    Quids in! readers told us just three in five of them use a bank account. The rule of thumb is that a regular account, or a Basic Bank Account, helps ensure Universal Credit payments come through, and payments go out, without a hitch. More on banking here
  3. ID, ID, ID
    So many people don’t have a good set of ID documents. There is no reason why you should have to have a passport or a driving licence but it seems the government assumed everyone does. You’ll need it to start a Universal Credit claim… and to get a bank account, if you don’t have one. More here
  4. EARLY BIRDS CATCH THE WORM
    People whose claims get delayed have often put off getting ready for Universal Credit until it happens. Now we understand how to make the move onto the new benefit system easier, start working through the things you need, (ie, everything on this page), as soon as you realise Universal Credit will affect you
  5. SAVE TO BORROW
    Here’s the best example of why we need prepare early. Although claimants can ask for an advance while they’re waiting for their first payment, repayments are then deducted from future payments. Saving, especially with a Credit Union if you have one locally, means you can build a buffer to fall back on and also organise a loan to tide you over while moving to monthly payments in arrears. Best started no later than a year before things change
  6. DIGITAL
    One in five (21%) of Quids in! readers told us they had no access to the internet. Almost all Universal Credit claimants need to make and manage their claim online. The government wants everyone to use the web and you can fight the power but you’ll probably struggle to receive Universal Credit on time. More advice to get you started here
  7. BALANCING THE BOOKS
    Making sure we have more coming in than going out is a straightforward exercise. More important is knowing what to do if this won’t be the case. With Universal Credit, earning more is an option but cutting other costs is the usual place to start. We can’t do anything until we know where we stand. More here
  8. GOING WITHOUT
    The minimum period Universal Credit claimants will wait for their first payment is five weeks. Any previous Housing Benefit claim will continue for two weeks but then the landlord will want to hear when their rent will be paid. We need to plan ahead or be prepared to join hundreds of other claimants forced into debt and joining the queues for the foodbank.
  9. THE SAFETY NET
    This is a new system and it’s being improved all the time but there is lot that isn’t perfect about Universal Credit. There are helplines, for example, but to start with they were understaffed and charged a premium rate, which campaigners got changed. Some claimants can get their rent paid direct to the landlord but will the landlord accept this? People who find work are supposed to be better off but will they be?
  10. BEING HUMAN
    It is the human condition to freeze when facing trouble but it’s the worse thing when it comes to money. Getting informed and preparing ahead is the best plan but find help if you need it once it comes to the crunch. Too many people have waited until they receive a letter from the landlord mentioning eviction.
What To Do Now: Next steps for anyone who is or will be moving onto UC

There are two things we recommend you do straight away, if you are worried:

  • Don’t get stressed, get informed 

Read through the information here, and try to get hold of a copy of our Universal Credit Guide which has more detail, and write down all the questions you have at the end.

  • Help on hand 

Now find out who can answer those questions. This can range from your local council or your landlord, through to national advice lines and websites.
We’ve listed the most important ones here.