Last week saw the launch of a pilot scheme of one of the Coalitions most totemic welfare reforms: the Universal Credit. Dubbed as one of the largest reforms in the history of the welfare state, it will take until 2017 to fully implement and will affect approximately 8 million people when the scheme is complete[1]. At present, it is limited to a pilot scheme in Ashton-under-Lyne, Greater Manchester. The government has claimed that the reform is both “radical and vital” that will help those who are unemployed or on low-income[2].
The aim of the Universal Credit is to reduce the complexity of the system and ‘make work pay’. This is done through replacing several income-based tax credits and benefits* with a single Universal Credit. When the claimant starts work, the credit will be steadily withdrawn as their income increases. This replaces the current system in which separate benefits are tapered at different rates, obscuring whether an individual is better off in work or working longer hours and creating ‘cliff-edge’ withdrawals that mean that an individual will not always be better off by working longer hours.
The purpose of a pilot is to identify whether components of the policy are flawed and need to be amended before the policy is rolled out across the country. For example, if it was found that the decision to make the policy ‘digital by default’ (individuals are only allowed to claim the credit online) was flawed (due to many of the poorest not having access to an internet connection) then it would be modified before being rolled out to the rest of the country. The current plan of implementation will be to switch to using the Universal Credit for new claimants in October 2013 and shift existing claimants onto the Universal Credit in April 2014 (except for Housing Benefit claimants who will be transferred onto the Universal Credit between December 2015 and December 2017)[3].
By Will Archdeacon
* income-based Jobseeker’s Allowance, income-related Employment and Support Allowance, Income Support, Child Tax Credits, Working Tax Credits and Housing Benefit
Quoted links
[1] http://www.bbc.co.uk/news/business-22299580
[2] http://www.bbc.co.uk/news/business-22299580
[3] http://www.money.co.uk/article/1008635-what-is-universal-credit.htm
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