Benefits claimants could be 'trapped in poverty'

Benefit claimants could find themselves "trapped in poverty" when a new single welfare payment is introduced next year, it is being claimed.

While the Universal Credit was sound "in principle", the Joseph Rowntree Foundation said its implementation could leave some people worse off.

It warned any financial gains people might make in part-time jobs may be wiped out if they found full-time work.

Officials said anyone struggling would get the help they needed.

In the biggest shake-up of the welfare system in generations, the single consolidated payment will replace a host of existing working age benefits for new claimants from October 2013.

Ministers say the Universal Credit - to replace income-based Jobseeker's Allowance, income-related Employment and Support Allowance, Income Support, Child Tax Credits, Working Tax Credits and Housing Benefit - will increase work incentives and reduce poverty among those on low incomes by ensuring people keep more of their income in employment and benefits are withdrawn more gradually.

But analysis of the new system for the Joseph Rowntree Foundation, by the University of Portsmouth and the Centre for Social and Economic Inclusion, has raised serious concerns about its administration and potential outcomes.

While some would see improvements to their finances, the report concludes, not everyone will benefit and some could be worse off on universal benefit than under current arrangements.

While it found the shake-up would incentivise more people to take jobs of fewer than 16 hours a week, it said it would not "encourage" recipients to go on to search for full-time work.

Any "marginal" increase in earnings from a full-time job would be counteracted by work-related costs such as childcare and travel.

The Foundation warned this was "self-defeating" and that people aspiring to increase their hours and income should not be penalised.

After the system is launched nationally in autumn 2013, existing claimants will be transferred to universal credit in stages until 2017.

Amid worries about whether the new IT system being set up to process payments will be able to cope, the report calls for more details about stand-by arrangements if systems crash and for ministers to consider creating an ombudsman to deal with complaints.

The Department of Work and Pensions has expressed confidence that its IT systems will be ready in time for the implementation of the new payment.

The report also warned that separate changes to council tax benefit and social fund loans designed to help families in crisis could make the system more complex not more straightforward.