Universal Credit: What is it and how does it work?

The Department for Work & Pensions in London (Kirsty O’Connor/PA) Credit: PA Wire/PA Images

Universal Credit was touted as the most radical reform to welfare since the Second World War when it was launched.

But the new way of operating the benefit system has been controversial and a new National Audit Office report said the rollout has not provided value for money and caused hardship for many people.

Here are some of the questions and answers surrounding Universal Credit.

  • What is Universal Credit?

It is a single monthly payment which sees different working-age benefits, such as Jobseeker’s Allowance and housing benefit combined into one system.

It was announced by then work and pensions secretary Iain Duncan Smith at the Conservative Party conference in 2010.

  • How does it work?

Universal Credit replaces housing benefit, child tax credit, income support, working tax credit, income-based Jobseeker’s Allowance and income-related employment and support allowance – creating one payment.

Claimants may have to wait up to six weeks before they receive their first payment under the scheme, due to it being paid monthly in arrears.

It is paid directly into a bank account, and involves claimants who receive help with the cost of rent having to pay their landlord directly.

  • What does Universal Credit cover?

It is made up of a standard allowance, and includes extra amounts for those who are eligible in areas such as housing, those who have children, or those who have a disability or health condition.

Universal Credit can be claimed by those in and out of work, with no limit on the amount of hours a claimant can work per week. But the amount paid decreases as claimants earn more.

A claim for Universal Credit is submitted online by the claimant.

  • When was Universal Credit introduced and who was responsible?

The welfare reform was spearheaded by its architect, Mr Duncan Smith. The former Tory leader oversaw the launch of Universal Credit as work and pensions secretary.

Universal Credit was brought in in 2013 and has been gradually introduced across the UK in stages since then.

The latest figures, which date from May, show 920,000 people are receiving Universal Credit, of whom 340,000 are in employment.