People on Universal Credit 'more likely to find jobs'

People claiming the new Universal Credit are "significantly" more likely to move into work and to seek more hours than those on the old Jobseeker's Allowance, according to new research from the Department for Work and Pensions.

And welfare reform minister Lord Freud said that the impact of more people working longer hours - and claiming lower benefits and paying more tax as a result - means the roll-out of UC across the country will have an estimated economic benefit of £6.7 billion a year from a £1.7 billion upfront spend on its introduction.

A study of 16,000 claimants found that among people on UC - which replaces six existing benefits - some 113 found work within nine months for every 100 who were receiving JSA.

Meanwhile 86% of UC recipients in part-time work of fewer than 30 hours a week said that they were looking for longer hours and 77% trying to earn more, compared to just 38% and 51% respectively under JSA.

UC claimants spent around 50% more time searching for work, earned more than similar JSA claimants and work on average 12 more days than comparable claimants on the old system

Only around 250,000 people have so far applied for UC during its delayed roll-out, which was initially intended to be complete by 2017. But the new system is now in three-quarters of Job Centres and will be in all of them by the spring of 2016, with the bulk of claimants due to be moved onto UC by 2020.

Work and Pensions Secretary Iain Duncan Smith said the study showed the impact of his flagship scheme was "incredibly positive".

He put the change down to reforms which remove perverse incentives in the old system, which penalises people seeking to work more than 16 hours a week by withdrawing as much as 96p in benefits for every extra pound they earn. Under UC, he said, withdrawal rates are no more than 80% and claimants continue to receive advice after finding work on how to extend their hours and improve their work prospects.

He rejected an estimate from the independent Institute for Fiscal Studies that 2.6 million households will find themselves £1,600 a year worse off under the new system, arguing that the thinktank failed to take into account the "dynamic" effect UC will have in encouraging people to find work and take on extra hours.

"Welfare reform is fundamentally about transforming lives and providing opportunity for all and Universal Credit is at the heart of this," said Mr Duncan Smith.

"The new benefit is now in three-quarters of all Job Centres and the impacts we are seeing are remarkable. We promised to reform welfare, and this Government is delivering, with claimants moving into work faster and earning more compared to the old system."

Welfare reform minister Lord Freud said the introduction of Universal Credit was driving "massive differences in attitude" among part-time workers by creating incentives to take on extra hours, earn more and progress in employment.

Mr Duncan Smith brushed off reports that he had to fight off attempts by George Osborne to make UC less generous to plug gaps in the budget left by the Chancellor's U-turn on planned reductions to tax credits.

Characterising the reported row with the Treasury as a "constructive discussion" of the kind that is normal in any spending round, he said Mr Osborne's words at last month's Spending Review had made clear that UC was here to stay.