Billed as 'Universal Credit: Welfare That Works', the White Paper is designed to simplify the benefits system and encourage people back to work. The BBC described it as, 'The biggest welfare shake-up since the 1940s...'
The new system is designed to ensure that claimants who find work will keep more of their income. Mr Duncan Smith said, "At its heart, the Universal Credit has a simple ambition – to make work pay, even for the poorest. This will finally make it easier for people to see they will be consistently and transparently better off for each hour they work and every pound they earn."
Claimants will be split into four groups - according to how close they are to getting back to work. The groups depend on a system of 'conditionality' and they are described as follows:
- No conditionality – disabled people or those with a health condition that prevents them from working, lone parents or lead carer with a child under age one.
- Keeping in touch with the labour market – lone parent or lead carer with a young child aged over one but under five.
- Work preparation – disabled people or those with a health condition which prevents them from working at the current time.
- Full conditionality – jobseekers.
The reforms ensure that social landlords will receive their tenants' housing benefit payments directly, allaying fears that housing associations would lose a stable income stream.
The National Housing Federation (NHF) has broadly welcomed the reforms as they, 'contain reassurances for housing associations that the housing component of the new credit will be based on actual rents rather than a flat notional allowance for housing costs.'
However the NHF is, 'concerned about the implications of increased conditionality within the system, the impact on vulnerable people and any potential increase in homelessness.'
The Chartered Institute of Housing (CIH) has written a detailed briefing about housing benefit reforms, setting out the possible consequences for individuals and economic stability.
Some charities are concerned about ministerial plans to enlarge the areas used to calculate housing benefit payments for private tenants, warning that using larger regions, where rents can vary greatly, will drive poorer tenants out of cities into cheaper areas with no jobs.