Universal Credit represents a “new kind of welfare”, say MPs

11 May 16

The government’s plans to increase the support available to in-work claimants of its flagship Universal Credit benefit could represent the most significant welfare reform since 1948, but are untested anywhere in the world, MPs have said.

In a report looking at plans to help people who are in work to increase their hours in order to boost their earnings, the work and pensions select committee said this amounted to “a new kind of welfare”.

UC will combine six existing benefits into a single payment. These are: Jobseeker’s Allowance; Income Support; Employment and Support Allowance; Working Tax Credit; Child Tax Credits; and Housing Benefit.

Full implementation of UC has been delayed after a series of IT problems, but all single jobseekers can now claim the benefit.

As part of the programme, those in receipt of UC who are in employment will be given support to increase their earnings through taking on extra work or being paid more. Claimants will be required to take mandatory actions under the scheme, which will be delivered through Jobcentre Plus.

While such support and requirements are common for out-of-work claimants, the MPs said that it represents a radical policy departure for those in jobs.

Committee chair Frank Field said this “promises progress in finally breaking the cycle of people getting stuck in low pay, low prospects employment”.

He added: “We congratulate the government for developing this innovation. As far as we can tell, nothing like this has been tried anywhere else in the world. This is a very different kind of welfare, which will require developing a new kind of public servant.”

However, the committee added that as nothing like this had been developed elsewhere, realising its potential required a steep on-the-job learning curve.

Supporting in-work claimants will require work coaches in job centres to have additional and enhanced skills. Should current pilots of the scheme be developed into a full national service, around one million working people will be subject to some form of in-work requirements, the committee highlighted.

In addition, the reform must help confront the structural or personal barriers in-work claimants face to taking on more work, such as a lack of access to childcare and limited opportunities to take on extra hours or new jobs. The question of how sanctions would also be applied needed to also be considered.  The use of financial sanctions for in-work claimants must be applied very differently to those for out-of-work claimants, they added.

Responding to the report, a Department for Work and Pensions spokesman said:

“We are pleased that in their positive report the work and pensions select committee agrees it is right we help people on low incomes to earn more and move off benefits under Universal Credit.

“Conditionality is a long-standing part of the welfare system and we know it helps people into work. That is why we have included it as part of our trials looking at how best to support claimants to increase their earnings.”

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