Universal Credit runs risk of creating hundreds of new means-tested systems

Britain’s benefit claimants could face hundreds of new means-tested systems under the new Universal Credit reform, according to ISER’s Professor of Economics, Mike Brewer.

Professor Brewer has co-authored a new paper, Benefit Integration in the UK: An Ex Ante Analysis of Universal Credit with James Browne and Wenchao Jin from the Institute for Fiscal Studies, examining the impact of Universal Credit.

The report, to be presented at the Economic and Social Research Institute Budget Perspectives Conference in Dublin on Thursday 27 September, finds the UK Government’s reform of benefits will create winners and losers. Couples with children will be better off, while lone parents will suffer after transitional protection expires.

There will be mixed impacts on incentives to work – single adults and main earners in couples will find stronger incentives to work, but there will be weaker incentives for both adults in a couple to work.

But it is the exemption of Council Tax Benefit from the new Universal Credit which could cause chaos for claimants and administrators, according to the new study.

Professor Brewer said:

“The Universal Credit has the potential to simplify the current complicated overlap between benefits and tax credits in the UK. But is hard to see why the Government has decided not only to leave out Council Tax Benefit from the Universal Credit system, but also to give local government control over its design. There is a real risk the UK could go from a system of six-means tested benefits to one with dozens, or even hundreds of different means-tested systems.”


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