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Universal Credit: welfare that works

Explore the transformative Universal Credit system as detailed in the 2010 White Paper, with insights on its design, benefits, conditionality measures, and impact on welfare recipients. Learn about key components such as taper rates, earnings disregards, conditionality rules, claims processes, and fraud prevention strategies. This comprehensive overview also delves into the dynamic benefits report recommendations and the upcoming Welfare Reform Bill of 2011. Prepare for a new era in welfare provision with Universal Credit.

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Universal Credit: welfare that works

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  1. Universal Credit: welfare that works Welfare Reform White Paper November 2010 Terry Patterson, Greater Manchester Welfare Rights Advisers Group

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 • As earnings rise, Universal Credit (UC) withdrawn at around 65p for each £ of net earnings.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

  3. 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

  4. 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’

  5. 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’

  6. 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)

  7. 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?

  8. 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

  9. 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

  10. 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

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