Universal credit and the benefits overhaul

The introduction of the government's flagship universal credit payment marks the biggest overhaul of the benefits system since the 1940s.

Potentially, the change will affect nearly eight million people. There is cross-party support for the theory behind the benefit, but its delivery has been delayed and criticised. Work and Pensions Secretary Iain Duncan Smith says the new benefit is £600m under budget and is being carefully rolled out "stage-by-stage" - with the aim of being offered in all job centres by 2016. So how will the changes eventually affect you?

What is the idea behind this?

The overhaul of the welfare system has been driven by Mr Duncan Smith, who argues that too many people are trapped on benefits. He says the changes are designed to make work pay - instead of people seeing their income drop when they move off benefits and into low-paid work. The move is also a bid to simplify the system by merging a string of working-age benefits and tax credits into one single payment, called universal credit. This is supposed to reduce the amount of fraud and error that hits the benefits system amounting to billions of pounds a year.

How will it work?

Six working-age benefits will be merged into one. So, those receiving income-based jobseeker's allowance, income-related employment and support allowance, income support, child tax credit, working tax credit and housing benefit will receive a single universal credit payment. This will mean big changes to the way those benefits are paid at the moment. Universal credit will be paid once a month, rather than fortnightly or weekly, and will go directly into a bank account. If both you and your partner each receive these benefits, then this will change to a single payment for the household. In addition, if you receive help in paying your rent at present, this money goes directly to your landlord. Under universal credit, you will receive the money as part of your benefit payment and you will then have to pay your landlord.

Will it require more money management from people?

Yes, it is all online. If you do not have access to the internet then you will have to go to the local library, although your local council and jobcentre may be able to help you. This online system is one of the big question marks over the shift to universal credit. Questions are being asked about whether the IT system is able to cope with millions of claims once the system is fully up and running. The National Audit Office said that IT glitches had already affected the national introduction of the scheme. Its report, published in September 2013, said there were "early setbacks" and that the Department for Work and Pensions had "weak control of the programme, and had been unable to assess the value of the systems it spent over £300m to develop". Two months later, the Commons Public Accounts Committee said the implementation of universal credit had been "extraordinarily poor", with much of the £425m expenditure to then likely to be written off. It said that oversight of the universal credit scheme had been "alarmingly weak", warning signs were missed, and there was a "fortress culture" among officials. Ministers said there was new leadership in place and controls had been strengthened.

Credit unions in the United States

Credit unions in the United States serve 100 million members, comprising 43.7% of the economically active population.[1][2] U.S. credit unions are not-for-profit, cooperative, tax-exempt organizations.[3] As of March 2016, the largest American credit union was Navy Federal Credit Union, serving U.S. Department of Defense employees, contractors, and families of servicepeople, with over $75 billion USD in assets and over 6.1 million members.[4] Total credit union assets in the U.S. reached $1 trillion as of March 2012.[5] Approximately 236,056 people were directly employed by credit unions per data derived from the 2012 NCUA Credit Union Directory.[6] Due to their small size and limited exposure to mortgage securitizations, credit unions have weathered the financial meltdown of 2008 reasonably well. However, two of the biggest corporate credit unions in the United States (U.S. Central Credit Union and WesCorp) with combined assets of more than $57 billion were taken over by the federal government National Credit Union

St. Mary's Bank of Manchester, New Hampshire holds the distinction as the first credit union in the United States. Assisted by a personal visit from Desjardins, St. Mary's Cooperative Credit Association (now named St. Mary's Bank) was founded by French-speaking immigrants to Manchester from the Maritime Provinces of Canada on November 24, 1908. As the leader of St. Marie's church, Monsignor Pierre Hevey was instrumental in establishing this credit union. Attorney Joseph Boivin managed the credit union, as a volunteer, out of his home in the evenings. America's Credit Union Museum now occupies the location of Boivin's home, where St. Mary's Bank first operated. Pierre Jay, a central banker and Edward Filene, a Bostonian merchant and philanthropist, were instrumental in establishing enabling legislation in Massachusetts in 1908.

Filene's philanthropy, combined with the practical implementation efforts of his associate Roy Bergengren were critical to the emergence of credit unions across the United States. Unlike the credit unions of Germany or Quebec, most credit unions in the US emerged from an employer-based bond of association. In addition to the traditional information and enforcement advantages resulting from the fact that members shared the same workplace, the employer-based bond permitted credit unions to use future paychecks as collateral.

The Credit Union National Extension Bureau, the forerunner of the Credit Union National Association was formed as a confederation of state leagues at a meeting in Estes Park, Colorado in 1934. Attendees at the meeting included Dora Maxwell who would go on to help establish hundreds of credit unions and programs for the poor in her lifetime and Louise McCarren Herring, whose work to form credit unions and ensure their safe operation earned the title of "Mother of Credit Unions" in the United States.

The number of credit unions reached their peak in 1969 with 23,866 institutions and total assets of $16 billion

A museum on the history of credit unions, America's Credit Union Museum, is located in Manchester, New Hampshire. It opened in 2002

Constitution and regulation

ICredit unions in the United States may either be chartered by the federal government ("federal credit unions")[10] or a state government.[11] The states of Delaware, South Dakota, and Wyoming do not regulate credit unions at the state level; in those states, a credit union must obtain a federal charter to operate.[12] All federal credit unions and 95% of state-chartered credit unions have "share insurance" (deposit insurance) of at least $250,000 per member through the National Credit Union Share Insurance Fund (NCUSIF).[13][14] This deposit insurance is backed by the full faith and credit of the United States government and is administered by the National Credit Union Administration.[14] As of December 2006, the NCUSIF had a higher insurance fund capital ratio than the fund for the Federal Deposit Insurance Corporation (FDIC).[15] U.S. credit unions also typically have higher equity capital ratios than U.S. banks

As of the end of 2007, the National Credit Union Share Insurance Fund insured more than $560 billion in deposits at 8,101 not-for-profit cooperative US credit unions.[16] For comparison, the FDIC insured more than $4 trillion in deposits at 8,560 banks and thrift institutions.[17] The NCUA and the FDIC are both independent federal agencies backed by the full faith and credit of the US government