Monday, 04 May 2015

Banks asked to help tenants with universal credit

The government is calling for banks and other businesses to come forward with financial products that will help benefit recipients cope with the demands of moving to universal credit.

Welfare reform minister Lord Freud issued the call yesterday, and said suppliers could include high street banks, mobile phone operators and pre-pay card providers.

Under universal credit a range of existing benefits will be combined into a single monthly payment, which will go to the claimant. Current rules allow weekly or fortnightly payments, and make some payments direct to the intended recipients, such as housing benefit payments going to a landlord.

Social landlords are concerned the changes will make it harder for tenants on benefits to manage their income. Several have already begun to encourage tenants to set up ‘jam jar’ accounts with credit unions, which allow income to be split into separate pots to cover certain expenses.

The Department for Work and Pensions has not specified the type of product it would like suppliers to introduce. It has set out some ‘essential features’ that the products must include, but said the ‘final design will be open to the market to devise’.

The essential features include supporting claimants to budget and manage their money, and allowing regular payments for housing and other main bills.

Lord Freud said: ‘Accounts that provide people with extra budgeting services could help to ensure people’s essential bills are covered – helping them to build up their credit rating and break the cycle of financial exclusion.

‘We are anticipating the call for new financial products may open up a new market place, where competition is strong. And we are looking for a range of diverse providers to step forward to express an interest, as we work towards the introduction of universal credit in October 2013.’

A spokesperson for the National Housing Federation said: ‘We hope his challenge to financial providers to design the product will create an account that will help people avoid falling into arrears and debt. But the process must move quickly as the changeover is just over a year away.’

Readers' comments (19)

Comments are only open to subscribers of Inside Housing

Already a subscriber?

If you’re already a subscriber to Inside Housing, your subscription may not be linked to your online account. You can link your subscription from within the My Account section of the website and clicking on Link My Account.

Not yet a subscriber?

If you don't yet subscribe to Inside Housing, please visit our subscription page to view our various subscription packages.

Have your say

You must sign in to make a comment

sign in register

Newsletter Sign-up

Related

Articles

IH Subscription