The Government wants banks and credit unions to create new current accounts to help benefit claimants better manage their money when its universal credit comes into force next year.

Welfare Reform Minister Lord Freud has revealed plans to help those who may need extra support with budgeting when the change to means-tested benefits comes into effect.

Basic bank accounts for the financially vulnerable already exist with many of the components proposed. But Government wants to see all these features combined into a single bank account.

This account would include:

  • The ability to create 'piggybank' accounts within their main account for different bills. These would be sub-accounts to siphon off money to pay for different bills, such as rent or utilities, so they aren't tempted to spend that cash.
  • These piggybank accounts would all have direct debit facilities that go from the piggybank to the relevant service supplier, such as their energy firm or landlord.
  • People would also be able to move spare cash onto a pre-payment card tp help them budget.

Alongside new banking products, plans are also being considered to ensure claimants who have debt problems, poor numeracy skills, mental health issues or drug addiction get practical support when they start claiming the benefit. 

Universal credit is the new single benefit replacing a range of means-tested benefits, which will be introduced from October next year.

Lord Freud says: "Most people on low incomes manage their money well, but the introduction of universal credit provides us with an opportunity to offer all claimants access to suitable banking products so that they can budget their benefits and earnings from work effectively."