Covid: What is universal credit - and what other benefits are available?

·4 min read
Picture of people entering a job centre
Picture of people entering a job centre

The chancellor is being urged to extend a temporary increase in universal credit, when he unveils his Budget on Wednesday.

The £20-per-week increase was introduced at the start of the pandemic to help struggling families, and is due to end on 31 March.

What was the increase and why is it under review?

Universal credit is claimed by more than 5.5 million households across the UK. The payment was increased by £20 a week in April 2020 as part of Chancellor Rishi Sunak's early Covid economic response.

The government says the boost was only designed as a temporary response to help those unable to work or struggling because of the lockdown.

The Joseph Rowntree Foundation - a charity which researches poverty - says millions of households face an income loss equivalent to £1,040 a year if the increase is scrapped, and that 500,000 more people will be driven further into poverty.

The government says it has made £280bn available to the most vulnerable families.

What has the government said?

The government has made no definite statement, beyond saying that additional help for the most vulnerable families will be set out in this week's Budget.

Speaking at the weekend, the chancellor said that he was focused on "preparing a Budget that provides support for people and businesses and families through the remaining stages of this crisis".

At the same time, he is under pressure to start spelling out how the government will begin repaying the country's debt, worth about £2 trillion.

What is universal credit?

Universal credit is a benefit for working-age people, which was introduced to replace six benefits and merge them into one payment. The old ones are:

  • income support

  • income-based jobseeker's allowance (except for some people with severe disabilities)

  • income-related employment and support allowance

  • housing benefit

  • child tax credit

  • working tax credit

Most people who would have made a new claim for these benefits, must now make one for universal credit, which was designed to make claiming benefits simpler.

Making a claim for universal credit stops payment of any existing legacy benefits, so it is worth getting advice before doing so.

A single universal credit payment is paid directly into claimants' bank accounts - monthly in England and Wales, but there is the option of payment every two weeks in Scotland and Northern Ireland.

It can be claimed whether you are in or out of work.

Universal credit may not be appropriate or available for everyone. Claiming it can affect other benefits, and it is vital to get some advice - available for free - before applying.

What are the concerns?

It is complicated to work out exactly how much universal credit you might receive. Some people, such as those with £16,000 or more in savings, will not be eligible at all.

Others may find what they receive depends on their circumstances, including any income their family has, as well as housing and childcare costs.

One contentious issue is that it usually takes five weeks from the date of claiming to receiving a first payment, although claimants may be able to get an advance loan.

An application for universal credit may put a stop to any tax credits you receive, even if it proves to be unsuccessful.

You may be able to claim a reduction in council tax when on universal credit, and get help with childcare costs. There is also support to pay the rent, which works in different ways across the UK. In time, there may also be assistance in paying the mortgage, although there are some strict criteria involved.

Mother holding young boy's hand
Universal credit can help with childcare costs

What other benefits are still available?

The main benefit for anyone losing their job after a period in work is new-style jobseeker's allowance (JSA).

This is worth £58.90 a week, if you are under 25, or £74.35 a week if you are 25 or over.

You can get this for up to six months and it will be paid into your bank, building society, or credit union account every two weeks. Unlike universal credit, your partner's or spouse's income will not affect your claim.

You may be able to claim new-style JSA as well as universal credit.

Where can I go for help?

There is a host of free guidance and advice available, including: