This White Paper sets out the Coalition Government’s plans to introduce legislation to reform the welfare system by creating a new Universal Credit. This Universal Credit will radically simplify the system to make work pay and combat worklessness and poverty. This publication outlines the need for change, how Universal Credit will work, how it will affect benefit recipients and its broader impact.
Universal Credit is an integrated working-age credit that will provide a basic allowance with additional elements for children, disability, housing and caring. It will support people both in and out of work, replacing Working Tax Credit, Child Tax Credit, Housing Benefit, Income Support, income-based Jobseeker’s Allowance and income-related Employment and Support Allowance.
The Government is committed to ensuring that no-one loses as a direct result of these reforms. They have ensured that no-one will experience a reduction in the benefit they receive as a result of the introduction of Universal Credit.Universal Credit will improve financial work incentives by ensuring that support is reduced at a consistent and managed rate as people return to work and increase their working hours and earnings. People will generally keep more of their earnings for themselves and their families than is currently the case.
Universal Credit will also remove the distortions in the current system that tend to over-reward people for working a specific number of hours that may not suit them or their employers. Universal Credit will ensure that all amounts of work will be more financially rewarding than inactivity and remove the current barriers to small amounts of work.