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Universal Credit and Work Activity

The much anticipated welfare reform white paper has been published by DWP today: Universal credit: welfare that works.  It outlines the government’s plans for welfare, primarily (as the title suggests) introduction of the Universal Credit (UC).

The UC replaces Working Tax Credit, Child Tax Credit, Housing Benefit, Income Support, income-based JSA and income-related ESA.  Contributory based JSA and ESA will continue to be paid, and this is where there has been lots of hype about a one year limit.  Any of you who know benefits knows that the contributory-based benefits are finite.  Once entitlement to these benefits is exhausted claimants will move to the UC.  Council Tax Benefit and Disability Living Allowance will continue to be paid.  Passported benefits will be subsumed into the UC with the aim of balancing their withdrawal in a more measured way than currently.  DWP will also be looking at whether this benefit should be paid monthly to reflect the majority of wage payments to help ease people’s transition to work.

The white paper declares that no-one will experience a reduction in the benefit they receive as a result of the introduction of Universal Credit.  It does later state There will be no cash losers at the point of change, ensuring that no one will see their benefits reduced when Universal Credit is introduced.  So possibly a honeymoon period before levels of benefit are reduced?  This is the first space to watch for future developments.

UC will consist of a basic personal amount with additional amounts for disability, caring responsibilities, housing and children.  As earning rise the UC will be withdrawn at a rate of 65%.  Earnings disregards are basically being increased to enable people to earn more before their benefits are affected, and the withdrawal of benefits will be slower and more measured.  Interestingly claims will be made by the household rather than individuals and both  members of a couple will be required to claim UC. The aim is for the benefit to be claimed online with the majority of contact conducted on line. 

Tougher sanctions designed to make people comply with conditionality are:

  • Failure to meet a requirement to prepare for work will lead to 100 per cent of payments ceasing until the recipient re-complies, and for a fixed period after re-compliance (one week, rising to two, then four weeks with each subsequent failure to comply).
  • Failure to actively seek employment or be available for work will lead to payment ceasing for four weeks for first failure and up to three months for a second.
  • Failure to accept a reasonable job offer, failure to apply for a job or failure to attend  Mandatory Work Activity (see below) will led to three months sanction for first failure, six months for the second and three years for the third failure.

Full details of the proposed sanctions are on page 34 of the white paper.

Mandatory Work Activity is the term used for the “work for your benefits”, “forced labour” hype that we have recently seen in the media.

MWA will be part of the toolkit that Jobcentre Plus advisers will have available to them. The paper states that the placement will be for up to four weeks.  So it doesn’t appear that this has any link to the Work Programme but is basically another jobseeker direction that Jobcentre staff can issue.  There is no more detail than that, so it looks like there will be questions for a few months yet about how this will be organised and delivered.

JCP will deliver the Universal Credit with JCP staff being given greater freedom to determine what help recipients need to return to work.  District Managers are also apparently going to be empowered to provide local solutions to local labour market challenges.  We aren’t sure how this fits into the “single welfare programme” approach or whether this means options such as the Right to Bid could return, so that’s another space to watch.

The paper confirms that there will be a significant reduction in administration costs and that roles and responsibilities of JCP, Pensions, Disability and Carers Service within DWP, HMRC and Local Authorities will change, but doesn’t go as far to say there will be job losses.

So that’s our summary of the white paper.  You can read the whole thing for yourself at the DWP website by clicking here. 

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