IDS defends monthly benefit plan

Work and Pensions Secretary Iain Duncan Smith has insisted shifting to monthly benefit payments will help the poorest as he dismissed claims the move will push low-income families into debt.

He told MPs the new Universal Credit had been designed for the majority but would also help longer-term claimants by weaning them off fortnightly payments before they return to work.

The Tory minister also defended moves to encourage claimants who have limited internet skills to apply online arguing it would be a "very good opportunity to get these people back in to the 21st century".

MPs on the work and pensions committee were also told that waiters, hairdressers and any other worker that receives tips will have to declare them if they claim the new benefit. "Tips are counted as income," said welfare reform minister Lord Freud.

Under the Universal Credit there will be one single monthly benefit payment - rather than weekly or fortnightly as at present - and social tenants will have to pay landlords themselves.

In a report, the Social Market Foundation think tank raised fears the poorest households would face further financial difficulties by changes to monthly payments. It said attempts as part of the new Universal Credit system to encourage claimants to budget properly and make their own rental payments risk "backfiring".

But Mr Duncan Smith, who refused to move to another Cabinet brief in the recent reshuffle, said the current system was set around the "problems of a minority" while the majority of people went into the benefit system through temporary job loss. Most of those had been paid monthly, he added.

"Getting this set for the majority is critical so we can get that cycle," he told the Work and Pensions committee.

"For those who have been longer term unemployed and have got used to fortnightly the point is that now the barrier to work is that going to monthly payments once you are in work is the wrong moment to identify when you have a problem because that means you are likely to crash out of work at that point because you can't cope."

MPs were told the Government is putting up to £140 million into helping people access "jam jar" style accounts, where money can be hived off into pots for rent and other expenses, or other accounts to help them budget. The Department for Work and Pensions has asked for banks and other institutions to apply to be part of the scheme.