- Half of people eligible for Universal Credit concerned about managing cash flow after change to monthly payments
- Four in ten who are eligible for Universal Credit say they prefer to manage their money using cash
- Payments Council has created a new free guide to help people receiving Universal Credit manage their money and understand payments
More than 2.7 million people who are currently receiving benefits believe they will struggle to make sense of their payment options once Universal Credit is introduced, according to research released today by PayYourWay.org.uk, the Payments Council’s consumer education campaign.
One in every two people who are eligible for Universal Credit think that the change will make it more difficult to manage their money, with common concerns including running into or increasing debt, and struggling to pay bills or rent on time.
Pay Your Way research has identified that one of the key obstacles is that nearly half of people affected by the Universal Credit changes have not thought about how they will budget differently once they have been switched to monthly payments.
Under the new scheme, weekly or fortnightly payments will shift to monthly payments and Housing Benefit will be paid to the claimant’s bank account instead of going directly to a landlord or housing association. New claimants in six more areas (Hammersmith, Inverness, Rugby, Harrogate, Bath and Shotton) are being moved on to Universal Credit, starting from October.
In response to these concerns, Pay Your Way has created a guide to help people understand payment types and financial planning, which will help with budgeting and cash flow for people affected or concerned by the introduction of Universal Credit. The guide can be viewed at PayYourWay.org.uk.
Further research from Pay Your Way shows that this is advice that could benefit everyone – not just Universal Credit recipients. For example, over a third of UK adults don’t know the total of their household bills, including rent, each month, and a quarter admitted not knowing when money is scheduled to be going in or out of their account.
Adrian Kamellard, Chief Executive of the Payments Council said: “The introduction of Universal Credit means that people will have to be savvier about managing their money and will have to plan for the whole month instead of budgeting on a weekly basis.
“Understanding payments can help manage cash flow. Our guide explains different payment options which in turn can help pay bills on time, stay on top of your money and avoid missing payments or going overdrawn.”
Pay Your Way is teaming up with Working Families and Gingerbread to help ensure people who would benefit from advice on budgeting and managing their money – especially as Universal Credit rolls out across the country – receive the support they need.
Fiona Weir, Chief Executive of single parent family charity Gingerbread said: “We know that families are good at managing small amounts of money coming in at different times, but moving to monthly budgeting under universal credit will be a big change. There will also be a big focus on online claims, so now’s the time to start getting ready by improving your computer skills, and getting a bank account set up.”
Will Hawden, Benefits Advisor from work-life balance charity Working Families said: “It’s also a good time to consider your budget and work out how you would pay housing costs, fuel, childcare and other bills, and when these bills go out. In most cases, you’ll be responsible for paying everything out of your Universal Credit and any earnings you have (Child Benefit will still be paid separately). You’ll also be responsible for making and maintaining your claim online.”