Welfare Reform
Many people on benefits perceive the financial risks of moving into work as just too great. For some groups the gains to work, particularly at low hours, are small, and any gain can easily be wiped out altogether by in-work costs such as transport. The Government has identified two key problems with the current system: work incentives are poor and the system is too complex. We want to reform the system to help people to move into and progress in work, while supporting the most vulnerable.
The Budget outlined the first steps in achieving these goals, but the scale of the Government’s ambition in this area warrants the consideration of more fundamental structural reforms. We are now consulting on how we can simplify the benefits system and improve incentives to work.
The key options presented in the consultation are:
- a single integrated Universal Credit, which could bring together out-of-work benefits, Tax Credits and payments for needs such as housing costs;
- a Single Unified Taper which would ensure that we look at all of someone’s benefit entitlement when we look at their earnings; and
- possible changes to the conditionality rules for people getting benefits.
We are also looking at proposals from a number of external organisations including a Single Working Age Benefit, a family allowance and a negative income tax model.
Structural reform could enable us to deliver some fundamental changes to ensure that work always pays and is clearly seen to pay.
We welcome views on these proposals from all who are interested.
