Universal Challenge

A highly critical Universal Credit report was launched today by the think tank, The Resolution Foundation, Universal Challenge – Making a success of Universal Credit.

The body chaired by former conservative Minister David Willetts, with the director of policy being a former policy advisor to the Labour, Party Torsten Bell criticizes the policy direction that UC is heading.  The report written by David Finch, a Senior Economic Analyst who worked for 8 years at the DWP, assesses the impact that Universal Credit is having on the UK with some key recommendations about its focus.

The report sets out a three point plan for Secretary of State, the Rt Hon Stephen Crabb MP that is designed to both ‘ensure that UC will provide the support needed for families moving into and progressing in work in the future, and to make implementation as simple as possible’.

The report also calls on the new minister to ‘restate and reclaim the role of UC in supporting more people into work and then boosting earnings, rather than being a source of savings for the Treasury to meet fiscal targets’.  A similar call made by former Minster the Rt Hon Ian Duncan smith MP when criticising the treasury following his resignation.

Some of the key findings include:

  • 3 million working families entitled to support in the tax credit system will no longer be entitled to in work support leaving them £42 worse off on average;
  • a further 1.2m set to receive UC will be £41 per week worse off; and
  • 1.7m still in receipt of UC will be better off by an average of £38, in part due to the more generous treatment of housing costs; and
  • Only 200,000 families – a mix of those without children and couple parents – who are no longer entailed to UC at all will be overall better off following cuts to in-work support and boosts to income from the living wage and income tax cuts.

The report recommends that the Minister

  • Ensure that the incentives UC creates are focused on those most likely to respond and in most need of support. With the employment picture vastly improved over recent years and levels of worklessness in households dropping dramatically, UC must be refocused to meet the living standards challenge of the future rather than the past.
  • Embrace the challenge of tackling low pay and progression. Despite the welcome stride taken forward with the implementation of the National Living Wage, in-work poverty and low pay look set to remain key challenges in the coming years – UC must be ready to meet them.
  • Take the chance to reassess the way in which the UC system itself functions and the processes people must go through when making their claim. As currently designed, UC piles extra burdens on recipients, these could be eased. Making people’s lives more difficult may make them resistant to the change UC brings. Requiring recipients to provide complex information so the system can calculate entitlements risks creating errors and mistakes that could cause implementation to stumble.

A full copy of the report can be downloaded from here: http://www.resolutionfoundation.org/publications/universal-challenge-making-a-success-of-universal-credit/


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