Universal Credit will make work pay for some of the poorest people in Britain, is central to the government's programme for welfare reform.
However it is dressed up, the simple fact is that the government will pay benefits to fewer people, for shorter periods and often for lower amounts. This will mean that people must look out for themselves where possible, and arrange their own protection from being unable to pay the bills due to accident or sickness.
Universal Credit: Welfare That Works will remove the complexities of the current benefit system that at the moment means it pays to stay on benefits rather than go into work.
The new credit will provide a basic amount with additions for those with children and other caring responsibilities, people with disabilities and those with housing needs. It will be available for people both in and out of work and will replace the complicated and inefficient patchwork of existing support including: Working Tax Credit, Child Tax Credit, Housing Benefit, Income Support, income-based Jobseeker's Allowance and income-related Employment and Support Allowances.
The new Universal Credit will ensure that support is withdrawn slowly as people return to work and increase their working hours, meaning that they get to keep more of their earnings for themselves and their families regardless of how many hours they work.
Iain Duncan Smith says, "At its heart, Universal Credit has a simple ambition to make work pay, even for the poorest. It will cut a swathe through the massive complexity of the existing benefit system and make it less bureaucratic to run. And by utilising the best data technology available, we will streamline the system to reduce administration costs and minimise opportunities for fraud and error at the same time. This will change Britain for generations, and make sure we have a welfare system fit for the way we live and work today."
There will be a new system of conditionality backed up by tougher sanctions for those who do not comply. Claimants will be split into four different groups depending on how close they are to getting back to work, and we will tailor the support they receive depending on which group they are in:
No conditionality - disabled people or those with a health condition that prevents them from working, lone parents or lead carer with a child under age one
Keeping in touch with the labour market - lone parent or lead carer with a young child aged over one but under five
Work preparation - disabled people or those with a health condition that prevents them from working at the current time
Full conditionality - jobseekers
Income protection insurance: News update: 16 November 2010