The UK's largest high-street banks are reluctant to offer bank accounts to help benefits claimants manage their budgets when the welfare system reverts to universal credit later this year.
Universal credit will deliver benefit payments in a single monthly lump sum, replacing the current welfare system’s separate weekly or fortnightly instalments.
The adjustment will require claimants to budget effectively over the course of the month.
Sensing that some may find this difficult, the Government has approached banks to create multifaceted bank accounts that would allow money to be allocated into different pots, such as savings and bill repayments.
The Department for Work and Pensions (DWP) has reportedly offered £145 million towards these accounts after feedback revealed that many expected to find it more difficult to cope with a single monthly payment.
But banks are thought to consider the solution as too costly and overcomplicated. Such accounts, which are already in short supply, traditionally cost users upwards of £12 per month - an amount that consumers in receipt of benefits are unlikely to be willing or able to pay.
Gillian Guy, the chief executive of Citizens Advice, expressed concern that without help to adapt, many will find themselves turning to expensive short-term loans.
"Without support, many people making the transition will find themselves in debt and could be forced to turn to payday or doorstep lenders," she told The Times.
Crackdown on Benefit Cheats
Work and Pensions Secretary Iain Duncan Smith has launched a new crackdown on benefit fraud that could see repeat offenders losing access to benefits for up to three years.
“The benefits system is there to help people when they need it most, so it's particularly galling when some people try to cheat the system not just once, but two or three times," he said.
Those who continue to claim whilst in work are eligible to have their wages seized as part of the crackdown, which aims to claw back £1 billion per year.
Mr Duncan Smith said that reform was desperately needed as a deterrent to fraud, which is thought to have cost the taxpayer £1.2 billion last year.
Keith McDonald
Which4U Editor
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