Welfare reform minister Lord Freud says Universal Credit claimants could keep fortnightly payments for up to two years with their cases reviewed periodically.
Delivering a speech at the Centre for Responsible Credit Annual Conference earlier this week the minister said the Government was still developing guidance on exceptions to monthly payments – following concerns claimants would struggle to move from fortnightly payments.
Universal Credit will be rolled out over four years from October 2013 and will see claimants receive a single monthly payment in arrears in replace of six income-related benefits, including housing benefit, tax credits etc.
Lord Freud said yesterday: “Some claimants could be made an exception to the Universal Credit monthly payment rule for a period of time, whilst they tackle their debts and learn to manage their finances better.
“Our guidance on exceptions to monthly payments is still being developed but the most likely scenario is that claimants’ financial circumstances will be reviewed periodically on a case by case basis, with a minimum and maximum review period - ranging from six months and two years.”
It is understood the timeframes could also apply to the other exceptions including splitting payments between joint claimants and paying housing costs directly to the landlord.
Lord Freud said findings from the direct payment demonstration pilots will help to inform the final development and design of the payment exceptions.
In an explanatory memorandum on the draft Universal Credit regulations published earlier this year, the Government said that exceptional payment arrangements would be “time-limited and implemented in conjunction with the appropriate support to ensure claimants successfully transition to monthly budgeting”.
It says a “screening process and decision maker discretion” will determine claimants’ eligibility to payment exceptions who may be refereed by advisors or third parties.
It said: “Final decisions on eligibility for payment exceptions will be taken by a member of staff. Applications will be considered on a case by case basis, with a range of vulnerability and financial risk criteria taken into account.”
The Department for Work and Pensions recently announced plans to initially subsidise budgeting bank accounts for tenants for up to a year and it has also invested heavily in credit unions to ensure they’re delivering services to support claimants through Universal Credit.
Lord Freud also confirmed yesterday that benefit claimants used to being paid fortnightly will be able to opt in for an advance payment to bridge them on to the monthly system of Universal Credit.
He said: "We expect the advance to be made at the two week point to bridge the gap."