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Changes to Benefits payments in 2013 Overview

Summary: This article draws attention to the changes taking place in the benefits and tax credit system and possible implications for those in debt.

Introduction

From April 2013 through to 2016, major changes are being made to the benefits and tax credits system affecting millions of people in this country. As cutbacks occur, many people will find their overall financial situation worsening, and for those already struggling with debt repayments, the changes could have devastating consequences.

Understanding the changes

The following series of articles will flag up the main changes and how they might affect you. It's important to be aware, and to plan ahead. To be forewarned is at least to create an opportunity to assess likely impact and consider options.

Reduced income

Whether it's a cap on benefits through the Universal Benefits system, or loss of housing benefit through the "bedroom tax" or one of the other changes, the net effect for many will be less income. The charity turn2us has conducted a survey suggesting that 68% of people on benefits will be spending less on food and heating as a result of the changes. 29% of those interviewed thought they would have to take out or increase debt to cope.

Frequency of payments

Universal Credit will be replacing a number of other benefits (income support, income-based JSA and Employment Support Allowance, Housing benefit and tax credits). The Universal Credit payments will be made monthly. For some, the change from weekly to monthly benefits will create significant issues. In the turn2us survey, 39% thought it would be less easy to budget due to less frequent payments.

Debt implications

It goes without saying that reduced income will result in greater difficulty in debt repayments. Reduced income means that we need to look more carefully at our outgoings to see if savings can be made. However the priority payments of rent/mortgage, council tax, utility bills, food, and travel to work have to remain priorities. In order to meet these priorities it may be necessary to look at ways of reducing expenditure on debt repayments.

Seeking Advice

Apart from seeking advice on benefits-entitlement, it is important for those in debt to seek advice on ways of controlling debts when the income simply isn't there. Debt solutions companies or Citizen's Advice Bureau's will be able to assess possible solutions to a debt situation.