Universal credit and benefits squeeze for jobless to be announced

Work and Pensions Secretary Iain Duncan Smith today announces plans for a single universal credit to “make work pay” and cuts to benefits for those who don’t take up work offers.

Work and Pensions Secretary Iain Duncan Smith today announces plans for a single universal credit to “make work pay” and cuts to benefits for those who don’t take up work offers.

The aim of the white paper on welfare reform is to bring all work-related benefits under one credit, although it has not yet been decided what to do about support for childcare. It will allow claimants to keep more of their income if they get a job and will mean benefits will taper off slowly as they move into work. If they refuse a job or community work or fail to apply for a job they have been advised to appy for, however, they could face losing benefits. On first refusal, they risk losing benefits for three months; if they refuse twice they could lose benefits for six months and if they refuse three times they could lose benefits for three years.

Duncan Smith says the reforms will simplify the current benefits system, make it less open to fraud and less costly. It will mean updates on people’s income can be made "in real time" rather than annually, he says.

He believes the existing system allows unemployed people to become trapped on benefits because they earn less in low paid jobs, but there are concerns that the paper is being published as the country is anticipating hundreds of thousands of job losses in the public sector.

The universal credit will include jobseeker’s allowance, housing benefit, working tax credit, income support and employment support allowance, but will not include things like child benefit.  The timescale envisaged for the new credit is that new claimants will get it by 2013, with all other benefits recipients migrating onto it after 2015. However, the sanctions for those who don’t take jobs could come into effect much sooner, as soon as the legislation is passed.

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