Ipswich Unemployed Action.

Campaigning for Unemployed Rights.

Posts Tagged ‘Resolution Foundation

Universal Credit: Costs More Than Previous System and makes 60,000 Families Worse off.

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Resolution Foundation research suggests 600,000 families could be worse off

Universal credit, the government’s flagship welfare policy, will be more expensive than the system it replaces, according to a new report.

The rollout of the reformed system, which brings six benefits into one, has been hampered by delays amid widespread concern that the changes could force people into poverty, while there have also been reports that universal credit, which has undergone phased introductions across the UK, has increased reliance on food banks.

In the autumn budget the chancellor, Philip Hammond, announced that an extra £1.7bn would be injected into universal credit, which combined with the projected £3.2bn higher benefit take-up would make it more expensive than the legacy system it replaces, the study states.

The Resolution Foundation says.

This briefing note focuses on the implications of recent changes to Universal Credit (UC) – in particular the £1,000 increase in work allowances announced in Budget 2018 – for the number of winners and losers from the switch to this new benefit system, for UC’s generosity and for its impact on work incentives.

David Finch, Laura Gardiner.

Key findings

  • The Budget 2018 work allowance increase means that the number of working families that gain from the switch to UC increases by 200,000 – from 2.2 million families previously to 2.4 million families now. Among working families with children, the number (1.5 million) expected to be better off under UC now matches the number (1.5 million) expected to be worse off.
  • Relative to the pre-Summer Budget 2015 UC system, the work allowance and taper changes of recent years have restored or improved incentives to enter work at low earnings for renting single parents and the first earner in renting couples with children; and reduced incentives to enter work at low earnings for home-owning parents who are either single or first earners in couples, and non-parents without disabilities.
  • Single parents and second earners in couples with children – both very likely to be women – are most responsive to work incentives. As such, it is a concern that UC continues to incentivise single parents (particularly renters) to reduce working hours below the 16 hours backstop present in the tax credits system. It also still fails to sufficiently incentivise work for second-earner parents.
  • One of UC’s major advantages is that it gets rid of the very highest rates at which benefits are withdrawn in the existing system, which can leave people with less than 10p for each additional £1 earned. However, the fact that taxpayers on UC keep just 25p of each additional £1 earned (even less when paying for childcare costs) means that challenges remain.

Recommendations

  • We suggest boosting single parent work allowances, at a minimum, to the equivalent of 15 hours a week on the wage floor, and introducing a second earner work allowance for those in couples with children.
  • Financial incentives to progress in work should be boosted by gradually lowering the taper rate. In addition, planned progression pilots should test a far more ambitious system of practical support to help low-paid workers progress and secure better-quality roles.

Another day, yet another story:

Universal credit: Rent arrears double for benefit claimants

BBC.

Council tenants on universal credit have on average more than double the rent arrears of those still on housing benefit, a BBC investigation has found.

In Flintshire, north Wales, one of the first counties to test the new payment, the council says rent arrears have gone up by £1m.

One claimant there said a mistake left him with just £29 a month to live on.

But the UK government said it had listened to concerns and universal credit was working well.

The BBC contacted every local authority in the UK that has council homes about their arrears. The results from the 129 councils that responded showed the average amount owed by tenants claiming universal credit across the UK is £662.56. For those still on housing benefit it is £262.50

Flintshire council said this week that tenants on universal credit in the county owe on average four times as much rent as those on the old benefits. At times it has been even higher; in September it was six times as much.

In the 18 months since universal credit was introduced in Flintshire, the council’s rent arrears have increased by £1m, something officials say is largely due to the new benefit.

Ipswich:

Ipswich & District Trades Union Council

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Open meeting on the Universal Credit Crisis with key speaker Mark Page, a regional officer in the PCS with a background in the DWP.

Hosted by Ipswich & District Trades Union Council, all welcome.

Mark Page, Regional Officer PCS  will speak on the UNIVERSAL CREDIT CRISIS.

Every day another horror story about Universal Credit hits the news headlines, how and when will it end?Following debate at Congress, the TUC’s policy is for Universal Credit to be stopped and scrapped. What should replace it?

7.30pm Wed Nov 21st 2018 Unite Office, 13, Arcade St, Ipswich

This meeting is part of the build up to Unite Community’s National Day of Action on Universal Credit on Sat Dec 1st 2018.

Written by Andrew Coates

November 12, 2018 at 11:18 am

Iain Duncan Smith: Universal Credit, Nothing Succeeds like Failure.

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Iain Duncan Smith is a limpet.

Surrounded by advisers from limpet-land.

He is still there in the DWP, clinging on.

Limpets are not known for writing masterpieces, rivaling the cast of the Big Bang Theory, or indeed any thinking whatsoever.

So it’s no surprise that a few weeks of power finds IDS in trouble again.

To repeat……..

Over the years, Iain Duncan Smith’s reputation for administrative competence has been shredded, as delays and logistical problems have dogged his schemes. Only last Friday, a court ruled that shambolic new payments for disabled people had led to unlawful delays. His role as the face of harsh welfare cuts has also eroded his once-bold claims to be a champion of the poor. But despite all the wear and tear, his single biggest reform – the universal credit – is something which all the parties and pundits continue to buy into in principle. Much of the media continues to swallow, entirely uncritically, Mr Duncan Smith’s claims that this one bold move can, once and for all, make work pay for everybody.

On Monday, the Resolution Foundation publishes an analysis of the Duncan Smith architecture which – while sympathetic to the basic aim of merging numerous benefits – offers a refreshingly clear-headed recognition that benefit policy is always going to involve striking difficult balances. The report shows meticulous respect for scarce public funds and also casts its eyes up from the immediate practical problems dogging the implementation, concentrating instead on asking whether or not the Duncan Smith plans have got those tricky balances right.

In several respects, the answer is no. Most particularly, there is a worrying tendency for the planned reforms to operate to the disadvantage of working women. Universal credit expends considerable resources on allowing the main earner in couples – still most often the man – to keep more of what they earn, even though these are people who will often work full time irrespective of benefit rules. By contrast, a family’s second earner – still typically the woman – will often gain less than now from entering work at all, and then again for putting in an extra hour. Further special problems will dog single parents, which overwhelmingly means single mothers of course, with rent to pay. Families with large childcare bills are another problem. The Resolution Foundation invokes a non-exotic example case in which a tangle of tax, universal credit and nursery bills would reduce the effective minimum wage rate for an hour to just 20p.

Guardian.

Today we find that the  Resolution Foundation says this,

The improvements necessary to enable UC to, at a minimum, make work pay and smooth the transition into work must be made before millions of families are moved onto the new system. The start of the new parliament provides a natural opportunity to review the potential impact of UC and set out plans for its near- and medium-term development. Our proposals span two phases:

  • The first phase – covering the period when UC is fully rolled out, largely over this parliament –  seeks to focus incentives to work on the groups most likely to respond, in order to maximise its potential impact. Our recommendations in this phase are cost-neutral, recognising a backdrop of ongoing fiscal constraint.
  • The second phase – in the next parliament, following UC’s full roll-out – incorporates ambitious proposals designed to ensure UC is fit for purpose over the next decade and maximises its impact on employment. Our recommendations here are no longer bound by our short-term cost-neutral constraint but continue to fit within official projections of the expected long-term level of spending on working-age benefits.
  • Through analysing the evidence, it became apparent to us that the policy focus in UC must shift from reducing worklessness to encouraging and supporting all members of a household into decent, sustainable work. Simply being in work is not enough; the objective must be to tackle endemic low pay. To do so, we make recommendations that would improve incentives and provide effective practical support to help people progress. It is our hope that this approach will improve the living standards of millions of low to middle income families, helping them find a better balance between work and other commitments.
  • UC must learn the lessons of the current tax credits regime, particularly in relation to simplicity. The existing system successfully supports many people into work. However, its highly complicated structures and interactions can mean those who could stand to benefit most do not do so. The withdrawal of multiple benefits at the same time (and at varying rates) fails to provide workers with a clear incentive to progress and increase their earnings. A better-integrated and simpler-to-navigate working-age benefit system – which we have made suggestions to develop – can help to achieve these aims.
  • Simplifying the system will not be enough on its own however. To reach the targets set for UC, it is imperative that incentives to enter work are rebalanced. Those most in need of support to start working – single parents, second earners with children and the disabled – should have their incentives strengthened. Those with fewer barriers to work – people without dependent children – must not have their work choices distorted. Government must improve incentives to progress in work. People will feel little impetus to do so if 76 pence of every additional pound earned is lost through reduced benefits and payment of income tax and NI. Along with getting the financial incentives to progress right, effective practical support can help people improve their earnings via the route most appropriate for them.
  • With significant numbers of families set to start claiming UC next year – many of whom will have more complicated circumstances than those who are already receiving it – the start of the new parliament provides a perfect opportunity to reflect on the current design of UC. We hope that the new government finds our review to be a constructive and practical guide as it decides how to proceed. The warning our report makes is that a failure to revisit and revise policies now, and overlooking the changes needed to make UC a success, would represent a missed window of opportunity that may not present itself again once the system becomes fully bedded in.

Welfare Weekly summarises the report in more direct language,

Iain Duncan Smith’s flagship Universal Credit programme could turn low-income working families into ‘second class savers’, a think tank has warned.

The report ‘Making It Work‘, by the independent think tank Resolution Foundation, is largely supportive of the government’s attempt to simplify the benefits system.

However, the report warns that flaws in the Universal Credit system need to be addressed before millions of savers are moved onto the new benefit.

In the current tax credit system, income other than earnings are treated depending on a persons employment status, resulting in non-working people being treated more harshly than those in employment.

Under Universal Credit, working families savings will be treated just as harshly as for those people who are not in work. For every £250 in savings over a £6,000 threshold, working families will lose £4.35 a month in Universal Credit payments – creating a disincentive to put money aside.

Those with over £16,000 in savings will get nothing at all.

Income from sources such as occupational pensions, maternity allowance and maintenance payments will result in a ‘pound-for-pound deduction’ in a families benefit entitlement.

The Resolution Foundation says this will deter families from putting any money aside in savings and has branded Universal Credit as being ‘particularly unfair’ for working people. Especially considering the government’s recent £1bn move to provide increased flexibility for ISA savers.

The think tank has called on the government to exclude ISAs from Universal Credit calculations, which they claim will benefit around 200,000 working people. Universal Credit should also treat income from sources such as pensions and maternity allowance in the same way as earnings.

In other words putting some money aside will be punished under the new system.

Which is logical in a sense.

As the article notes anybody on JSA can be penalised for having some (pretty meagre in IDS terms) savings.

You might get the impression that the government prefers us to get into debt,

You would be right.

Iain Duncan Smith – the (legal) loan-sharks’ best mate.

 

Written by Andrew Coates

June 8, 2015 at 11:18 am