Roll-out of the controversial Universal Credit to three million people has been postponed by Work and Pensions Secretary Amber Rudd.
MPs were due to take a vote on extending the benefit to three million recipients in the next few weeks, but that vote has been pushed back and now they will only be asked to transfer just 10,000 people onto the new system.
Labour want the whole scheme scrapping, but the government insists everyone will be transferred over by 2023 as planned.
Since taking over her new post Ms Rudd has said she would ‘listen very carefully’ to the criticism levelled at the system and admitted ‘it could be better’.
Universal Credit was conceived as a way of reforming the UK benefits system and encouraging people back into work by combining six different benefits:
Job Seeker’s Allowance, housing benefit, children’s tax credit, working tax credit, income support and employment and support allowance.
However, it has been the subject of considerable criticism as late payments have forced some recipients into debt.
A BBC investigation found that council tenants on the new benefit have more than double the rent arrears of those still on housing benefit.
The new system has also been criticised by veteran MP Frank Field, chairman and the Work & Pensions Select Committee who said that rather than encouraging people into work it was acting as a barrier.
His committee said that parent s having to pay for childcare up front which receiving their benefit a month in arrears was a barrier to work rather than an encouragement.
Mr Field added it was ‘irresponsible’ to put this burden on ‘struggling, striving parents’.
The committee report said: “Parents and carers’ decisions about whether and how much to work are closely tied to being able to access affordable, good quality childcare.
“The Department for Work and Pensions aspires for 200,000 more people to work under Universal Credit than under the system it replaces, and for people already in work to contribute over 100 million additional hours every year.
“Its success or failure in achieving these aims depends largely on working parents. That means that making childcare payments work is critical to the success of Universal Credit.”
A source close to Ms Rudd said the pause in the roll-out was ‘the right thing to do’ and should ensure MPs she was taking their concerns seriously.