Universal Credit: welfare that works

Welfare Reform White Paper November 2010

Terry Patterson, Greater Manchester Welfare Rights

Advisers Group

‘a radical new approach’ Combines income-related support into ‘a

simple, integrated, benefit for people in or out of work’.

Basic personal amount (similar to current Jobseeker’s Allowance) with additional amounts for disability, caring responsibilities, housing costs and children.

As earnings rise, Universal Credit (UC) withdrawn at around 65p for each £ of net earnings.

‘Higher earnings disregards will reinforce work incentives for selected groups’.

How to include? Disability Caring Disabled children Mortgage interest Childcare (Voucher, discount or additional

earnings disregard?) Upper age limit / allow dual system? (Pension

Credit may include help with rent and an income-related element for dependent children)

National insurance credits

Taper + Earnings Disregards Dynamic Benefits report (Centre for

Social Justice, 2009) strongly recommended 55%

65% on net earnings = 76.2% on gross earnings rise for tax/NI payers

without children - no earnings disregard for single person, £10 a week for couple

with children or disabled = higher But clawback on rent / mortgage

interest to a ‘disregard floor’

Conditionality + Sanctions Extended conditionality regime EG. Possible loss of JSA 3 months, 6

months, 3 years Also changes affect existing out-of-work

benefit recipients ahead of UC Hardship payments – not for all sanction

period – loans instead? Mandatory Work Activity – ‘experiencing

the habits and routines of working life’

Claims + Change of Circumstances

‘Digital First’ = internet, email Back up = Phone Last resort = face-to-face –

possible role for Local Authorities (LAs)?

But face-to-face for conditionality (JCP)

Processing HMRC PAYE real-time collects earnings DWP = process and get other details Pay monthly and offer budgeting

support October 2013 – October 2017 roll-out Based on ESA2 system = Accenture?

Other issues Work Programme - ‘personalised

help’ LAs may keep HB for supported /

temporary accommodation Social Fund Community Care Grants

and Crisis Loans go to LAs Passported benefits - use income

thresholds not benefit DLA – under review

Fraud

“damaging social and media perceptions that ‘everyone is at it’”

£50 civil penalty if fail to report CoC One strike / two strikes, etc Recover fraud @ higher rates (25% up) Fast track Direct Earnings Attachment Widen debts recovery if official error

And finally... Contributory JSA “continues in its current

form but with the same earnings rules as UC”

Assumed lowest income for self-employed is National Minimum wage for hours worked

UC will match labour market of part-time + flexible working patterns

‘Progressive’ – average gains poorest 30% = £2-£4 a week

Welfare Reform Bill Jan 2011 + Equality Impact Assessment