The Secretary of State for Work and Pensions, the Rt Hon Iain Duncan Smith, today announced the introduction of a Universal Credit designed to simplify the benefit system and improve work incentives.
The Universal Credit will simplify the benefits system by moving from the current benefit structure to a simple streamlined payment. People’s benefits will also be withdrawn at one unified rate.
The plan is to migrate recipients from the current benefits and tax credits systems onto the Universal Credit starting in 2013 and finishing in the next Parliament.
The reforms will be set out in more detail in a White Paper later in the autumn and put before Parliament in a Welfare Reform Bill next year.
The new Universal Credit system aims to:
- improve work incentives through a combination of improved earnings disregards and/or lower benefit withdrawal rates;
- smooth the transitions into and out of work;
- reduce in-work poverty;
- simplify the system, making it easier for people to understand, and easier and cheaper for staff to administer; and
- cut back on fraud and error.
The Secretary of State has also announced today that the Government will introduce a new Enterprise Allowance which will offer people who are out of work and entering self-employment a weekly payment linked to the value of their benefit for a period of up to six months.
Notes to Editors:
- The initial plans for radical welfare reform were set out in a Command Paper published on 30 July: http://www.dwp.gov.uk/consultations/2010/21st-century-welfare/
- The proposals were then opened for consultation which closed on Friday 1 October.