Universal Credit

Part of Estimates 2014-15 — Department for Work and Pensions – in the House of Commons at 6:15 pm on 7th July 2014.

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Photo of Angela Watkinson Angela Watkinson Conservative, Hornchurch and Upminster 6:15 pm, 7th July 2014

The DWP is delivering the biggest welfare reforms for a generation, improving services for claimants and cutting costs concurrently. The objectives are: to control the costs of welfare; to get as many people as possible into or back to work; to strengthen incentives to work by making it pay; to support people who need welfare; and to be fair to the taxpayer. Benefits have been capped so that no household can receive more on out-of- work benefits than £26,000, which is what the average working family earns. That is still very generous, as many people in full-time employment do not earn as much as £26,000; we are talking about an equivalent of £500 a week for couples and those with children and £300 a week for single people. Housing benefit has also been capped so that benefit claimants face the same lifestyle decisions as other working people have to make—living where they can afford and limiting the size of their family to what they can afford.

The most radical reform is the introduction of universal credit, a new single benefit integrating income support, income-based jobseeker’s allowance, employment and support allowance, housing benefit, child tax credit and working tax credit. At the heart of this hugely ambitious UC programme is the intention to make work always pay. The scale and complexity of administering UC cannot be overestimated, and its introduction will necessarily be incremental. Under UC, 1.1 million households will keep more of their earnings when starting work of 10 hours per week; and 3.1 million households will have a higher entitlement, with 75% of those being the poorest households. Replacing that complex range of benefits with one new single benefit offering incentives to work and protection for those who cannot work is a significant challenge, and a policy of incremental expansion is the right way in which to introduce it.