Universal Credit scheme rolls out

Millions of claimants including the unemployed will eventually receive Universal Credit

The government's flagship welfare reform - Universal Credit - is starting the next phase of its national launch but far more slowly than intended.

Hammersmith and Fulham is the latest council to start trials of the new credit, which will replace six means-tested benefits by 2017.

A more ambitious roll-out was supposed to have begun this month.

But the process suffered management and computer problems and Labour has described it "total chaos".

Eventually there will be 8m households on the new credit, according to the Department for Work and Pensions.

But the scheme has so far only been used in a handful of pilots in the north west of England, and recent estimates suggest just 1,000 people have claimed it so far.

Earlier this year ministers decided to slow the process right down due to problems with management at the Department for Work and Pensions, and difficulties with the construction of the new IT system.

The challenge is building a computer system which can handle the changing circumstances of all those claimants, and ensure they are always better off as they take on more work.

'Overambitious'

The record of the department was severely criticised last month in a report by the National Audit Office which concluded that the reform had been badly managed.

The report said that the scheme was "overambitious" and poor value for money.

Six additional councils were supposed to sign up from October - but only Hammersmith and Fulham was ready to launch on Monday.

The others - Rugby, Inverness, Harrogate, Bath and Shotton - will join the scheme by the spring of next year.

But welfare minister Lord Freud said the "slow and careful" approach was now working well.

He said: "This is a massive cultural transformation that the government had to get right. We introduced Universal Credit in a slow, safe and controlled way in Manchester and this careful approach is working. We will build on these successes".

Ministers say the key advantage of the new credit is that the system is designed to ensure that moving into work always pays.

So as an individual comes off benefits and into a job, or takes on more hours at work, their income will go up under the new scheme.

The existing welfare system has been heavily criticised for institutionalising what critics describe as a "poverty trap" - where people do not have an incentive to work more because their income in some cases goes down if they do.

But the case for benefit reform may be weakened if there are no jobs for people to move into, or it is not possible for them to work extra hours.

Other issues - like the cost of childcare - may interfere with a smooth transition out of welfare dependency.

Hammersmith and Fulham is also trialling a system of intensive support for jobseekers alongside the Universal Credit pilot. Claimants will have four face-to-face interviews with a "work coach" within the first two weeks of signing on for Universal Credit.

Chris Bryant MP, shadow minister for welfare reform, said the "flagship welfare reform is now in total chaos.

"Universal Credit was supposed to be rolled out nationally this month - but instead we are seeing a scaled down version trialled in just a handful of job centres. And the NAO says tens of millions has now been wasted - with hundreds of millions at risk of being written off.

"This is an issue we need government to get a grip on, but David Cameron and Iain Duncan Smith have completely lost control. A One Nation Labour government will bring down the benefits bill by reforming social security to support more people into work."