The Government believe that work is the best route out of poverty and that we need to do more to make work pay. The announcement of a universal credit is the first step in making sure that work pays and that we better target financial support towards those most in need.
Universal credit will improve incentives to work (especially for low earners) by a combination of earnings disregards and a single withdrawal rate to reduce the credit when earnings exceed the disregard. This will make the benefits of work clearer and simpler: encouraging people to move into work and see the financial benefits of increasing the number of hours they work.
A person receiving universal credit who is able to work will be required under the conditionality regime to seek work until their earnings or hours of work have reached a given threshold. Initially, we intend to set a threshold which broadly equates to that which applies under the current benefit system. Once universal credit is established, however, we will be able to vary that threshold such that some people are required to work longer hours, or earn more, than under current arrangements, reflecting a greater degree of individualisation that is possible under universal credit.