11.11.10

Welfare Reform White Paper Launched

The Welfare Reform White Paper Universal Credit: Welfare That Works published today sets out details of the Government’s programme to overhaul the welfare benefits system and tackle the ‘culture of worklessness’.

The new Credit, available for people both in and out of work, will provide a basic amount with additions for those with children and other caring responsibilities, people with disabilities and those with housing needs.

The Government says the new Universal Credit will ensure that support is withdrawn slowly and rationally as people return to work and increase their working hours, meaning that they get to keep more of their earnings for themselves and their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.

The welfare reform plans include the referral of some jobseekers to a Mandatory Work Activity project where participants will be expected to spend at least 30 hours a week, for up to four weeks, on their Work Activity placement while they continue to look for work.

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 with appropriate support, depending on how close they are to getting back to work:

  • 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 which prevents them from working at the current time;
  • Full conditionality: jobseekers.

In the long run the Government expects the reforms to lift 350,000 children and 500,000 adults out of poverty.

The Government believes that the reforms will also help to tackle the incidences of fraud and error, present in the current system – costing the taxpayer around £5.2 billion a year (3 per cent of total welfare spending), and inefficiencies in the system (2.3 million contacts made to the wrong agency in 2009).

Launching the White Paper today, Iain Duncan Smith, the Secretary of State for Work and Pensions, said:

“With five million people trapped on out of work benefits and almost two million children growing up in homes where nobody works, we cannot afford to simply continue tinkering around the edges of the welfare system. Only root and branch reform will do.

“At its heart, the Universal Credit has a simple ambition – to make work pay, even for the poorest. This will finally make it easier for people to see they will be consistently and transparently better off for each hour they work and every pound they earn.

“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.”

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