Welfare reform minister Lord Freud says benefit claimants used to being paid fortnightly will be able to opt in for an advance payment to bridge them on to the monthly system of Universal Credit.

Universal Credit will be rolled out over four years from October 2013 and will see claimants receive a single monthly payment in arrears in replace of six income-related benefits, including housing benefit, tax credits etc.

There are concerns about the ability for claimants to manage monthly payments, which was put to Lord Freud yesterday at the House of Commons Work and Pensions committee inquiry into the progress of Universal Credit.

He said the Government was arranging an advance for people so that they don’t see any gap in their payments.

He said: “There is a provision that we've designed in so they can fill the hole if they need to as they move from fortnightly to a monthly system.”

Iain Duncan Smith, who was also being questioned, said the Government could even  “transition them over a longer period” if they were classified as having difficulty with budgeting.

Lord Freud added: “Anyone transitioning onto Universal Credit from other systems will have a facility to take an advance to meet any shortfall for the period before the formal set of payments are made.

“When the department transitioned from one week to two week payments there was a lot of provision put aside for exactly that reason and in fact remarkably little of those funds were drawn down by claimants.”

He said the interim payment advance would be paid at the two week point.

The Government also announced yesterday it was committing between £80m and £145m to help subsidise the creation of new bank accounts to help claimants budget under Universal Credit.