Book Chapter Budget perspectives 2013 2
Benefit integration in the UK: an ex ante analysis of Universal Credit
27 Sep 2012
The UK Government is currently preparing to implement a major reform to the welfare system by integrating (and simplifying) means-tested welfare benefits and in-work tax credits for working-age adults into a single programme, to be known as Universal Credit, and to be phased in from October 2013. The primary motivation is not to save money (although many other changes to welfare benefits have been announced since May 2010 which will save the government money). Instead, the aims are to make it easier for claimants to claim benefits, make the gains to work more transparent, and reduce the amount spent on administration and lost in fraud and error. The reform will increase entitlements to welfare payments in a way which, on average, helps low-income (working) families more than middle-income families, especially for couple families. But many details remain unclear, including how Universal Credit will interact with the new, localised Council Tax Rebate system, how tough the conditionality regime will be, particularly for working families, and whether Universal Credit can be made to respond automatically to claimants' earnings in real-time.