Universal Credit to replace working age benefits and tax credits

The Chancellor’s spending review announced a fundamental reform of the welfare system.

Proposals are being drawn up to replace all working age benefits and tax credits with a single, simple Universal Credit. The guiding rules will be that it always pays to work, and those who get work will be better off than those who do not.

In an effort to simplify the benefit system and improve work incentives, Universal Credit is set to replace the present benefit structure. A new law will need to be passed first, after which changes will take effect from 2013.

Universal Credit will simplify the benefits system by bringing together a range of working-age benefits into a single streamlined payment. The new system aims to:

  • Simplify the system, making it easier for people to understand, and easier and cheaper for staff to administer
  • Improve work incentives
  • Smooth the transitions into and out of work
  • Reduce in-work poverty
  • Cut back on fraud and error

The state pension age for men and women will reach 66 by the year 2020. This will involve a gradual increase in the State Pension Age from 65 to 66, starting in 2018. It will mean an acceleration of the increase in the female pension age already underway.

Behind the political rhetoric there is a simple message. The state will help those who cannot help themselves. The rest of us are expected to look after ourselves.

Income protection insurance is increasingly necessary.


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Universal Credit to replace working age benefits and tax credits
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