Universal Credit starts in Ashton-under-Lyne

Ashton-under-Lyne will today become the first job centre in the country to trial the government's welfare reform project, the Universal Credit.

The new system of benefit payments is being described by its architects and its critics as one of the biggest changes since the birth of the welfare state.

The idea behind Universal credit, according to the Department for Work and Pensions, is to simplify the welfare system. It will take a number of existing, separate payments:

  • Income-based Jobseeker’s Allowance
  • Income-related Employment and Support Allowance
  • Income Support
  • Child Tax Credits
  • Working Tax Credits
  • Housing Benefit

These will then be replaced with a single payment, paid directly to the claimant. The changes will initially only affect new claimants and those who's circumstances change from today.

The government says 'it will help claimants and their families to become more independent', not only by taking control of their own money, but by ensuring when those out of work, or working part-time, find employment or are offered extra hours, their benefits will be withdrawn gradually over time, not stopped straight away.

Ministers believe the current system leaves thousands parked on welfare, better off out of work than in. Put simply, Universal Credit aims to create greater incentives to find a job. Warrington South and Conservative MP David Mowat says the policy is summed up in 3 words: 'making work pay'.

The problem is undeniable. In Britain almost a quarter of GDP goes on welfare - last year it cost us £159bn, almost as much as heath and education combined.

Here in the North West, around 1 in 5 people of working age receive benefits.

Universal Credit aims to bring both of those figures down.

The protest and reservation comes less in the principle and more in the planning and implementation. The new system of payment requires claimants to have internet access and an online back account.

It will be paid in a single, monthly payment, marking a significant change for many claimants who currently receive welfare weekly.

Housing trusts in Warrington and Oldham, where pilots for Universal Credit are set to take place later this year, have told ITV Granada their biggest fear is rent arrears.

With housing benefit going directly to the tenant and not to the social landlord, First Choice Homes in Oldham told us they envisage many people slipping into debt, unable to cope with budgeting themselves, leaving them at risk of homelessness.

During a pilot for direct payment in one part of Wales, arrears rose seven-fold in just seven months. It's with that the housing associations here are fearful.