A new benefit system (Universal Credit) starts in Tower Hamlets this March.
The Government scheme aims to create more incentives for those able to work to encourage them to find employment.
The Universal Credit, which has been piloted in northern parts of the UK and Croydon, will combine all benefits available to those who claim benefits. These include Jobseeker’s Allowance, Income Support, Housing Benefit or Child Tax credits to be paid in one monthly payment.
Only those who are making new claims will be affected. By 2017 it is expected that anyone receiving benefits will be on the new system with the exception of pensioners and those claiming support for care and disabilities.
Tower Hamlets Mayor, Lutfur Rahman said: “Universal Credit will change the way that people access their benefits. It is important for residents to be aware of the impact that it will have on household finances.”
With the previous benefit system, claimants were limited to the amount of hours they could work whilst receiving benefits. Universal Credit has been designed to taper off the allowance in tandem with money coming in, meaning people can still claim benefits even if they work more than 16 hours per week.
One of the biggest differences for those receiving Jobseeker’s Allowance and Housing Benefits will be the move from fortnightly instalments to monthly. A spokesperson for the Department for Work and Pensions explained that this is to replicate a pay packet to encourage budgeting. He said: “In the past, Job Centres have been checking the benefits that people are on, now they will be more tailored under Universal Credit, providing more support and budgeting advice”.
The new system came under heavy criticism last year for taking too long to take effect, with the National Audit Office estimating an extra £2.8 billion on top of the £2.4 billion already invested to complete the task.
Rushanara Ali, Labour MP for Bethnal Green and Bow, referred to the current Government as being out-of-touch in a statement to East London Lines. She said: “Ministers promised that 1 million people would receiving it by April last year: latest figures suggest the actual number is only 26,000. The most vulnerable in our society are being failed by this incompetence.”
Ali is also critical of the cap made to benefits, with the limit to all benefits for single people being £350 per week and couples or singles with children being £500 per week. She said: “Changes to tax and benefits made by David Cameron have left families £1,600 worse off each year. Wages are down since 2010. In setting up a Universal Credit Rescue Committee, Labour has set out clear plans to reward work by tackling low-pay, investing in the future and recognising contribution in our welfare system.”
Tower Hamlets is one London’s poorest boroughs with half of its residents receiving some form of welfare support. Farida Yesmin, Director of the Limehouse Project, believes the monthly payments will cause problems for young people who are already struggling to manage their finances as well as the benefit cap. She said: “They will have very limited options really, either look for cheaper accommodation or share accommodation with other people and the second is they need to actively look for a job. Support is really very limited”.