Finance group to create jobs in benefit overhaul

The Skipton-based e-money current account company, credEcardplus, will help to ensure that an estimated 1.5m claimants who don’t have bank accounts will receive their benefits when Universal Credit is introduced.

Seventy nine credit unions, housing associations and other support agencies are issuing credEcardplus to members who, despite being excluded from the banking system, will be required to open an account in order to receive monthly Universal Credit e-payments.

Since January, the credEcardplus team has agreed contracts with 27 new credit unions, and seven housing associations. Last month, the Government’s flagship benefit reform was savaged by MPs for “shocking” failures which have already wasted at least £140m of taxpayers’ money.

A report published by the Commons public accounts committee (PAC) found the Universal Credit scheme has been blighted by “alarmingly weak” management, with secretaries allowed to authorise purchase orders worth more than £20m.

In some cases, the report said, it is unclear what suppliers have been paid for. Universal Credit is due to replace a bundle of means-tested benefits in four years’ time, with Work and Pensions Secretary Iain Duncan Smith insisting it will ensure people are always better off in work while saving taxpayers £38bn.

The issue has huge resonance in Yorkshire, where unemployment remains significantly higher than the national average, at 8.9 per cent. There are currently 143,000 people in the region claiming jobseekers’ allowance. Universal Credit is also due to replace the payments to many more people claiming in-work benefits such as working tax credits.

Geoff Leech, the managing director, credEcardplus, said: “The IT problems that are delaying the rollout of Universal Credit are, in many ways, a blessing in disguise; neither claimants nor welfare support agencies are ready to cope with the impact of Universal Credit. We are working with credit unions – including, Yorkshire-based Castle and Minster, in Kirklees, and LASER in Rotherham – to help them prepare their unbanked members for the onset of Universal Credit in order to mitigate the disruption that the new system will cause.

“Thinly-staffed credit unions all over the country will be flooded with requests for guidance and financial assistance. Social housing associations face mass rental arrears. Vast numbers of unbanked claimants will suddenly find they have no means of receiving benefits to which they are entitled.”

Mr Leech said credEcardplus, which has 26 staff, would be hiring more people next year.

A Department for Work & Pensions spokesman said: “We have always been very clear that claimants will receive help and support as they move over to Universal Credit. That is why we are investing an extra £38m in credit unions to ensure claimants have a safe alternative to high interest lenders and we are working closely with councils and the Money Advice Service to ensure people are getting the budgeting advice they need.”

The spokesman said the IT for Universal Credit is “up and running well” in the early roll-out of the new benefit scheme, with 90 per cent of claims being made online.

The Association of British Credit Unions said: “Many credit unions across the country are working with social landlords and other partners to ensure benefit claimants can make a smooth transition to Universal Credit when it is introduced in their area.”