The Universal Credit is a winner!

Posted 1 Oct 2010 by Walaa Idris

Reading this morning that Iain Duncan Smith, the Work and Pensions Secretary, has won his battle with the Treasury is heart warming. Anyone who knows IDS and has followed his work in the Centre for Social Justice knows his passion and commitment for fair, just and sensible social reforms, and today’s news is the crowning of years of his visionary and relentless dedication to that issue.

All the current benefits – housing benefit, income support, incapacity benefit and many others in the current scheme will be phased out into a single system – the ‘Universal Credit’. The new scheme is a simpler single benefit that will allow for claimants’ details to be kept in one system and unlike the current one that penalizes work, the new benefit guarantees people will be better off in work by allowing them to keep their benefit while working for short hours or when they increase their working hours. Along with that it will save the tax payer around £9bn a year in benefits.

The Universal Credit system should be fully operational within three years and it is said that the Treasury has allowed the DWP to use the first year’s savings to fund the changes needed which are intended to cut both cost and fraud. And although full details are not out yet but the skeleton of the work is in-line with Duncan Smith’s approach to fairness, equal opportunity, social justice and his belief that people must take responsibility for their own choices but that government has a responsibility to support them in making the right choice while still lending a helping hand to those who need it in our society.

1 comment(s)

ukFred

ukFred
2 Oct, 21:11

The Universal Credit will only work when it reduces the marginal rate of loss of income due to the combination of marginal rate of tax and marginal rate of loss of benefits comes down from the present 70.50% (93% if the recipient is receiving housing benefit as well) so that there is always a noticeable benefit when a person is earns. We also need to factor in the effects of any demands from the Child Support Agency so that it is always worth a person’s time to work.

The number of times I have seen a person on minimum wage stop working when they find the CSA has caught up with him is pretty high. With the economic situation in 2007, 2008, and 2009, it was pretty easy to get an employer to lay you off for reducndancy, especially when you had not been there for two years and therefore it only cost you notice pay, but at the same time he was immediately eligible for Job Seeker’s Allowance.

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