Removing run-on benefits will stop people finding work, CIH warns
Government to end extended payments
The new benefits system will disincentivise people to work by abolishing temporary payments which cover claimants’ housing costs when they find a job, the Chartered Institute of Housing has warned.
Currently, claimants who have been unemployed for six months can apply to receive four extra weeks of payments when they find a job.
The payments, often known as ‘run-ons’, cover claimants’ housing and council tax costs and are intended to incentivise people to find work. This is because people are less likely to struggle to pay bills in the early weeks of their employment.
Under draft regulations for the universal credit , published last Wednesday, extended payments will be abolished.
Sam Lister, policy and practice officer at the CIH, said: ‘There is no equivalent to extended payments in universal credit.’
Mr Lister said extended payments offered a ‘clear incentive’ for people to take employment.
The universal credit, which will be rolled out nationally from October 2013, will combine a host of benefits, including housing benefits into a single monthly payment paid directly to claimants. The system will be delivered through a website which will include ‘a better off in work calculator’, aiming to show tenants that they will be financially better off if they have a job than they are on benefits.
But Mr Lister said: ‘It is not necessarily about whether you are better or worse off in absolute terms, you ask any housing benefit department what the best incentive is in the system and they will say extended payments are something that work really well.’
A DWP spokesperson said: ‘Universal credit will ease the transition into work and help people to stay there - unlike the current system where benefit support almost completely dries up when someone gets into work.’
The draft regulations on the universal credit also included a £26,000 total household benefits cap.
The draft will now go to the social security advisory committee, which will decide whether to consult on them. The regulations are expected to come before parliament this autumn.