PHILIP Hammond has been accused of applying a “sticking plaster” to a broken system after announcing he will pump an extra £1 billion into smoothing the roll-out of Universal Credit.

The Chancellor insisted the controversial welfare reform – which merges six working-age benefits into a single payment – is “here to stay” as he delivered his last Budget before the UK leaves the European Union.

He said a package of new measures would help aid the transition, while an increase in work allowances would benefit 2.4 million working families with children and people with disabilities by £630 a year.

Critics said the changes were simply a “drop in the ocean” compared to the wider impact of reforms

Labour leader Jeremy Corbyn said UC is “causing increases in poverty, food bank use, rent arrears and homelessness” and called for its roll-out to be halted immediately.

Ian Blackford, the SNP’s Westminster leader, said: “Instead of halting UC, the Chancellor has only applied a sticking plaster to a system that is failing the weakest and the most vulnerable in our society.”

Mr Hammond used his Budget to insist the switch to UC was “a long overdue and necessary reform”.

He said: “It replaces the broken system left by the last Labour Government, a system that trapped millions on out-of-work benefits for nearly a decade.

“This is not just a welfare measure; it is a major structural reform to our economy that will help to drive growth and employment in the years ahead.”

However he said he recognised the “genuine concerns” held by many over its implementation.

He said a “package of measures worth £1 billion over five years” would help introduce additional protections as existing welfare claimants move on to UC, with more details to be unveiled later this year.

Meanwhile, work allowances – the amount people are allowed to earn before they start to lose their benefits – will be boosted by £1,000 a year. This will cost £1.7 billion annually once the roll-out of UC is complete.

Mr Hammond said: “That will benefit 2.4 million working families with children and people with disabilities by £630 per year.

“Universal credit is here to stay, and we are putting in the funding it needs to make it a success because, on this side of the House, we believe that work should always pay.”

Mr Corbyn accused the Chancellor of "reversing barely half the cuts made" to the welfare system.

He said: "When even the Work and Pensions Secretary (Esther McVey) admits that some people will be worse off, and the architect of universal credit says the system is underfunded, it was inevitable that the Chancellor would have to act, though he is only reversing barely half the cuts made.

"However, the problems with universal credit are also structural, harming the self-employed, lone parents, people with larger families and survivors of domestic abuse. That is why we believe the roll-out must be halted immediately."

He accused the Government of "cutting social security for disabled people" and "slashing services to the bone" while handing tax giveaways to corporations and the super-rich.

He said: "Far from tackling the 'burning injustices', as the Prime Minister said her Government were going to do, they have actually made them worse and increased the injustices in our society.

"The Equality and Human Rights Commission warned just last week that Britain is becoming a 'two-speed society' — all right for the richest few and failing the many.

"This Government are harsh on the weak and feeble with the strong. They labelled good people 'scroungers' and 'skivers' while they imposed punitive sanctions, demeaning assessments and a benefits freeze, none of which has been reversed today."

John Dickie, director of the Child Poverty Action Group (CPAG) in Scotland, said the increase in work allowances was “good news" for families receiving UC, but insisted a "bigger salvage operation is still needed for the benefit”.

He added: “This is crunch time for UC. The positive announcements on work allowances need to be followed by a pause in its roll-out to allow for a fundamental review of its design and, crucially, a commitment to restore all the money that’s been taken out of it.”

Mr Dickie also criticised the failure to end the wider benefits freeze, arguing it is driving rising child poverty in Scotland and across the UK.

Mr Hammond’s announcement comes just days after the Trussell Trust – which has 53 food banks across Scotland – blamed UC for a massive increase in starving families desperately turning to charities for food.

It said the level of need was now "unsustainable", with demand soaring by up to 80 per cent at some of its centres.

SNP Finance Secretary Derek Mackay, who will deliver his own Budget for Scotland in December, said the changes announced to UC "do not go far enough".

He added: "They are just a drop in the ocean compared to the impact the roll-out of Universal Credit will have. I continue to call for the roll-out of Universal Credit to be halted – and halted straight away."