Universal credit claimants will be given more time to switch to the new benefit, the government has said.
Work and Pensions Secretary Esther McVey said claimants would not have to wait as long for their money and debt repayments would be reduced.
She was setting how the extra money for the new benefit system announced in last week’s Budget would be spent.
Labour dismissed the new package and called for the roll-out of the “failed” system to be halted.
The plan is for almost seven million people to be on universal credit – which replaces six working age benefits – by the end of 2023.
But the new system has been hit by delays and claims it is forcing some claimants into destitution.
In last week’s Budget Chancellor Philip Hammond announced an extra £1bn over five years to help those moving to the new payments and a £1,000 increase in the amount people can earn before losing benefits, at a cost of up to £1.7bn a year.
The changes announced by Ms McVey include:
- People who claim income support, jobseeker’s allowance, employment support allowance will be paid for an extra two weeks when they move on to universal credit, from July 2020
- Advance loans, which help people bridge the gap, will only be clawed back at 30% of benefits per month, not 40%, from October 2019
- The deadline for claimants told to move on to universal credit will be extended from one month to three months
- Self-employed people moving on to the benefit will also be given a 12-month “grace period” exempting them from the “minimum income floor” which limits claimants to getting no more benefits than they would get if they were on minimum wage – even if they are making a loss, from July 2020
- Protection for 500,000 people claiming severe disability premium
Ms McVey told MPs: “This is targeted support to help work pay and support the vulnerable.
“While the party opposite may hanker for the dark old days, trapping people on benefits, excluding them from opportunity of work and getting on in life, and at the same time delivering a big bill to the taxpayer, we do not.”
Ms McVey also said she was looking at ways to reach the most vulnerable “whether it’s in isolated parts of the country or whether it’s people with learning difficulties or maybe difficulties with transport” during the rollout of the new system.
She said “new ideas” – such as a mobile centre or bus, as suggested by Tory MP John Howell – might be used to “connect” with claimants.
Labour’s shadow work and pensions secretary Margaret Greenwood said: “The Budget last week did little to address the very long wait for payments which is causing significant hardship.
“Despite this the government is now planning to start the next phase of introduction of universal credit which it calls ‘managed mitigation’, which will involve the transfer of £2.87m on to it.
“Universal Credit is failing. The opposition has consistently called on the government to stop the rollout but this government is pressing ahead despite the terrible hardship it is causing.”
Birkenhead MP Frank Field, who chairs the Commons Work and Pensions Committee, welcomed the extra cash Ms McVey had “managed to claw back from the Treasury”.
But SNP deputy Westminster leader Kirsty Blackman said people were “still worse off” as the benefit freeze and sanctions regime were still in place.
And Labour MP Jess Phillips raised concerns over a Birmingham Yardley constituent who had to move after being raped and was “forced” on to universal credit as a result.
“She works, she has always worked, she is £200 worse off – she is a single mother,” said Ms Phillips.
“What is being offered to her today, and which is why we’re not supporting it, is still going to be £160 a month worse for her.
“A rape victim, single mother, in work – what will she do for her?”
Ms McVey said she would like to meet Ms Phillips to discuss the woman’s case.