Covid: What is universal credit – and what other benefits are available?

The economic impact of the coronavirus outbreak means many thousands of people are losing their jobs – possibly for the first time.

This has brought universal credit – which has often proved controversial – and other benefits into focus.

Organising your finances after redundancy or a sudden drop in income, and claiming all the support available are crucial, but the process can be complicated.

I have lost my job – what shall I do?

The first step is to be aware of the state of your finances. Write a budget, know what income – if any – is coming in now and what bills are going out.

The biggest monthly expense is probably the mortgage or rent. You may have long-forgotten insurance protection policies that cover some of the cost in the event of redundancy, so check.

There may be help through the benefits system (see below), but you should talk to your landlord or mortgage provider if you are really struggling.

Next, find out what you are entitled to claim in benefits or tax rebates. The list is long and sometimes complex, and will depend on your circumstances.

What is universal credit?

Universal credit is a benefit for working-age people, replacing six benefits and merging them into one payment. The old ones are:

• income support
• income-based jobseeker’s allowance (except for some people with severe disabilities)
• income-related employment and support allowance
• housing benefit
• child tax credit
• working tax credit

You cannot make a new claim for these legacy benefits. Instead it must be for universal credit, which was designed to make claiming benefits simpler.

You can claim on the phone – although there have been long delays during busy periods over the summer – or online.

A single universal credit payment is paid directly into claimants’ bank accounts to cover the benefits for which they are eligible. It is paid every month in England and Wales, but there is the option of payment every two weeks in Scotland and Northern Ireland.

It can be claimed when you are in or out of work.

It is the benefit many people have heard of and consider claiming after losing a job – but it may not be appropriate or available for everyone. Claiming it can affect other benefits, and it is vital to get some advice – available for free – before applying.

You may be able to claim a reduction in council tax when on universal credit, and get help with childcare costs. There is also support to pay the rent, which works in different ways across the UK. In time, there may also be assistance in paying the mortgage, although there are some strict criteria involved.

In addition, the main benefit for anyone losing their job after a period in work is new-style jobseeker’s allowance (JSA).

This is worth £58.90 a week, if you are under 25, or £74.35 a week if you are 25 or over.

You can get this for up to six months and it will be paid into your bank, building society, or credit union account every two weeks. Unlike universal credit, your partner’s or spouse’s income will not affect your claim.

You may be able to claim new-style JSA as well as universal credit.

What are the concerns?

Universal credit has been the source of considerable debate from the start.

Firstly, it is complicated to work out exactly what you will receive. Some people, such as those with £16,000 or more in savings, will not be eligible at all.

Others will find what they receive depends on their circumstances, including any income your family has, as well as housing and childcare costs. The government has made it more generous for some for a temporary period during the pandemic.

One contentious issue is that it usually takes five weeks from the date of claiming to receiving a first payment, although you may be able to get an advance loan.

An application for universal credit may put a stop to any tax credits you receive, even if it proves to be unsuccessful.

Where can I go for help?

There is a host of free guidance and advice available, including:

• The Money Navigator tool from the Money and Pensions Service relates to coronavirus-related money matters
• The Turn2Us charity has a benefits calculator
• Guidance is available from Citizens Advice

What if I can’t face doing this right now?

Extensive research has revealed the links between financial difficulties and mental health issues.

Support is available for both, and research also shows that ignoring any serious financial matters could make both factors worse.

I have a job but my income has been hit as I’m isolating. What can I do?

Systems of stay-at-home payments of £500 for those who are self-isolating are being set up across the UK. They will be for people in receipt of benefits and were announced at the same time as the government outlined bigger fines for those breaking isolation rules.

Others can talk to their employers about sick pay or taking time off as holiday, for full pay.