IDS launches the new Universal Credit system

Today marks the next step in the "radical reshaping of the welfare system so the system works for hardworking people", the government claims. The Universal Credit pathfinder has been launched in parts of Greater Manchester. People who live in Ashton-under-Lyne will be able to make claims to the new benefit from today. At the same time, Jobcentres in Oldham, Wigan, and Warrington will trial other elements of Universal Credit, including the new Claimant Commitment and signing people onto Universal Jobmatch. 

Universal Credit aims to ensure people will always be better off in work. As people’s take home pay increases from work, their Universal Credit will reduce gradually so they won’t lose all their benefits at once. There are no fixed hours thresholds, such as the 16 hours a week rule, so even working just a few hours a week will make a difference. Universal Credit will also introduce Real Time Information (RTI) to help employers manage their payroll and help their staff get the right benefit payments. When people are in work and their hours change their employer will report it on RTI and their Universal Credit payment will be adjusted accordingly.

Secretary of State for Work and Pensions, Iain Duncan Smith said of these changes, “This Government is on the side of people who want to work hard and get on. Universal Credit is nothing less than the start of a fundamental cultural shift of the welfare system. This will revolutionise the way people experience the welfare state. It will make it easier for people to claim what they are entitled to but, more importantly, it will make it easier for people to move off benefits and into work.”

The Universal Credit pathfinder has begun in Ashton-under-Lyme to trail the new system with a limited number of people for six months before a gradual national roll out begins in October. The new system will be fully implemented by 2017.

However the Public and Commercial Services union today issued a challenge to work and pensions secretary Iain Duncan Smith to prove his claim that anyone is better off on benefits than in work. As the government launches universal credit, the union says the Department for Work and Pensions' own figures show it pays to work, contrary to the rhetoric Iain Duncan Smith and others continually use. And the minister's own staff in job centres use spreadsheet calculators to help claimants see how much better off they would be in work.

DWP figures show that, even compared to working for 30 hours a week on the minimum wage, benefits – including housing – are only worth 79% of in-work income. This is supported by data compiled by the Organisation for Economic Co-operation and Development to assess the 'replacement rate' for moving from benefits into work for dozens of household types. There is not one example of a household being better off on benefits. The challenge comes at the start of a week of renewed campaigning by the union on welfare issues, starting with a protest in Ashton-under-Lyne, where universal credit is being trialed.

PCS general secretary Mark Serwotka said: “If universal credit was being introduced to genuinely make life easier for people entitled to benefits it would be commendable, but the government’s pernicious language exposes its real intent is to demonise and punish them. We have shown that ministers are prepared to mislead and misdirect to drive through their welfare cuts so we are challenging Iain Duncan Smith and others to prove what they claim is true. The next time a minister says people are better off on benefits than in work, give them a pen and paper and ask them to show you how.”