UC free bank accounts..the banks say no!

Universal credit: Now UK’s banks turn on coalition over free bank account plan


Some of the UK’s largest banks have balked at the Tory-led coalition’s proposal to force them to set-up free current accounts for universal credit (UC) claimants.

With UC designed to ‘make work pay’ the government is determined to create employment-like conditions for jobless claimants, and is insisting that recipients of the new welfare system have their benefits sent directly to a bank account in the same way that salaries are paid.

However, many of the country’s claimants do not have current accounts and with banks often charging monthly admin fees to run accounts, the Treasury is keen to create an industry-wide service that would provide those on UC with a free service.

The Treasury is currently locked in talks with the big high street lenders, but government sources have claimed that negotiations have been marred by differences with the banks unhappy about the lack of fees.

It is rumoured that Chancellor George Osborne would like to announce in next week’s autumn statement that a deal for UC current accounts has been struck with the banks.

Last March the DWP announced that £145 million it had promised for the creation of budgeting accounts to help benefit claimants adapt to UC would not be available after all following intervention from the Treasury.

The funds were earmarked to encourage financial services companies to develop new basic banking facilities such as jam jar accounts.

However, following the Treasury’s intervention no contract was ever been awarded by the DWP to any company to deliver such a product.