From April 2013, the most significant change to welfare provision in a generation will commence with the introduction of universal credit.

The Social Market Foundation’s recent report Sink or Swim concludes that, without support, the introduction of UC, including the move to monthly payments, and housing benefit paid direct to claimants, not landlords, will leave households struggling to cope and has the potential to undermine the resilience of low-income households with children – throwing claimants into the deep end!

The ‘Budgeting Portal’ when discussed with focus groups received a positive response – flexibility and choice in the way benefit payments are received proved popular. Benefit paid monthly, by default as a lump sum could be directed to the portal online, or by post. It would not be a bank account but would provide flexibility over frequency of payment into the claimant’s bank account and determine the destination of housing benefit and other payments, effectively by ringfencing. Alongside this would be access routes to support services like budgeting and debt advice.

I welcome this approach – UC will make a significant impact on the ability of claimants to make financial decisions in a manner that previously they had not had to consider.

But you would expect me to raise some obvious concerns, not least the fact that a trusted brand must administer such a scheme. Let us look no further than the Post Office with its network of accessible offices across the nation. Initial advice on the merits of ‘opting in’ will need to be available.

Significant numbers of the population do not have access to online services nor the skills necessary to utilise the online world. Add to this the cost of online services and we begin to see that the portal must be accessible to all; we must look at other mechanisms for access including post, telephone and better availability of online services in localities such as local council and government offices.

At this point it is necessary to point out the pressing need for face-to-face advice on all aspects of UC. The savage cuts to the legal aid budget and supporting budget streams will inevitably impact on access and I am concerned that people will only opt in to the portal once they are in debt –  at what point will debt advice be triggered?

The move to monthly payments under UC is a significant problem requiring considerable support. At a vulnerable period in the lives of claimants, adequate loans and grants to assist them in the transition should be made available by government.

As the report concludes, the consequences for those families that sink is severe and the costs for the state significant. The portal is an attempt to influence behaviour at a time of unprecedented change and ministers need to look afresh at the timescale and implementation – the cost of failure is far too great!

—————————————————————————————

Yvonne Fovargue is the Labour MP for Makerfield and the chair of the all-party parliamentary group on debt & personal finance. She tweets @Y_FovargueMP