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Report: changed benefit may ‘leave claimants worse off’

02 November 2012


Committed: the Work & Pensions Secretary, Iain Duncan Smith, extols changes to the benefits system, at the Conservative Party Conference, in Birmingham, last month

Committed: the Work & Pensions Secretary, Iain Duncan Smith, extols changes to the benefits system, at the Conservative Party Conference, in Bir...

FLAWS in the new Universal Credit system could trap benefit claimants in poverty, a report for the Joseph Rowntree Foundation think tank suggests.

The report, Implementing Universal Credit, accepts that the new credit, which will replace a range of existing benefits from next autumn, is sound "in principle", but says that implementing it could "unintentionally" leave some claimants worse off.

The report's analysis declares that it would encourage people to take jobs of fewer than 16 hours a week, but would not encourage them to look for full-time work: "Marginal increases in earnings alone are unlikely to be sufficient incentive to move into full-time work." Small financial gains are "likely to be wiped out by costs such as childcare and travel".

Also, changes to council-tax benefit and to social-fund loans, designed to help families in crisis, would create complexity, and were "likely to be so aggressive as to leave some people worse off as their earnings rise".

The report, by the University of Portsmouth and the Centre for Social and Economic Inclusion, questions whether the computer systems at the Department for Work and Pensions (DWP) will be able to cope. The Universal Credit is to replace the income-based jobseeker's allowance, the income-related employment and support allowance, income support, child tax credits, working tax credits, and housing benefit.

IT experts described the timetable for the introduction of Universal Credit as "unrealistic"; and the study says: "The consequences of a system failure would obviously be serious for recipients of Universal Credit. The DWP needs to clarify the stand-by arrangements being put in place to ensure that claimants are paid." The report also says that switching to monthly single payments would be a "significant challenge" for low-income families, and demands a more visible ombudsman for the benefits and employment services system.

The Rowntree Foundation's chief executive, Julia Unwin, said: "Universal Credit reforms are approaching at breakneck speed; so the DWP must show similar urgency in addressing [these] very serious concerns."


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