Welfare reform vision unveiled
Friday, 30 July 2010 12:00 AM
By politics.co.uk staff
A comprehensive shake-up of the welfare system which could see Labour's tax credits potentially replaced by a 'universal benefit' is being outlined today.
A command paper from the Department for Work and Pensions (DWP) outlines a number of options, one of which could see the end of housing benefit, income support, council tax benefit, working tax credit and child tax credit.
These would be replaced by a 'universal benefit' which would be tailored to ensure claimants are always better off returning to work.
"The key thing is getting people back to work and the reality is that more money will be saved, you save through fraud and bad overpayments," work and pensions secretary Iain Duncan Smith said.
"All these things go on in this terrible system left over to us from the Labour party which is complex and very expensive."
According to the DWP working more than 16 hours a week is financially disadvantageous for many claimants under the current system. Around 1.9 million lose 60p out of every £1 they earn, while 130,000 lose 90p out of every pound earned.
"The complexity of the system also creates risk and uncertainty for the people in society who most need stability. We want to simplify the system to make it clear that work will always pay," Mr Duncan Smith said.
"Our reforms should also ensure the system is easier for individuals to understand and will reduce the high costs of fraud and error."
Labour's shadow work and pensions secretary Yvette Cooper said many families had been thousands of pounds better off in work.
"The budget is heading in the opposite direction, cutting tax credits and increasing withdrawal rates," she said.
"Major reform either costs billions or means taking money from those who need it most. Iain Duncan Smith needs to be honest and tell us which it is."
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