Government's flagship welfare reform moving at 'snail's pace'

Frank Field report
Frank Field report

The Government's flagship welfare reform is moving at a "snail's pace" and its hopes of meeting the scheme's original intentions are "in ruins", the chairman of the Work and Pensions Select Committee said.

Frank Field said changes to the Universal Credit (UC) work allowance thresholds will mean that some claimants in low-paid jobs will lose more than £2,600 as a result of the changes announced by George Osborne in the July 2015 Budget.

The Labour MP, in an audit of working-age welfare reform for the think tank Civitas, said the fate of UC showed the "collapse" of the Government's strategy to make work the best route out of poverty.

But Mr Field said the "glacial" roll-out of UC meant tax credits would remain in place until at least 2020 and he proposed a series of changes aimed at increasing wages for the low-paid rather than having the state subsidise employers who fail to pay staff higher rates.

In his report he said: "It is in the fate of Universal Credit, and the changes that have been made to the original ideas, that we see the collapse of the Government's strategy to make work the best route out of poverty.

"This judgment is not based simply upon the minute number of people claiming Universal Credit - there were barely 75,000 claimants by the 2015 general election when 1.7 million was the goal - and its minimal impact on welfare expenditure.

"Because of Universal Credit's higher taper rate for many claimants, the strategy of fixing 'broken Britain' by offering lower withdrawal rates than the current system lies in ruins.

"Universal Credit fails to incentivise the work on which the 'broken Britain' analysis was built. If creating an incentive to work is the goal, the present system, for the vast majority of claimants, meets that goal more effectively."

Mr Field added: "The transition from the original design of Universal Credit to the version which began to be rolled out at a glacial pace will reinforce still further the higher marginal tax rates for claimants in low-paid work."

He continued: "The prospect of Universal Credit being rolled out in full by the end of this parliament looks increasingly doubtful and its potential to fix 'broken Britain' has been diminished beyond recognition.

"We can safely assume from the snail's pace roll-out of Universal Credit that tax credits are here to stay at least until 2020."

The report proposed using the new National Living Wage as the basis for a new system aimed at helping and incentivising people in low-paid work to either seek more hours or change jobs.

That would mean centring tax credits on low-paid workers with children, ending entitlement for those without children by 2020.

The report said: "The aim of these reforms is not to pull the floor from underneath low earners without children. It is instead to ensure the labour market can provide them with a decent minimum income as well as the prospect of pay progression."

Jobcentre Plus staff would be given the role of helping claimants work more hours within an existing job or find new, better paid, employment.

Claimants would be allowed to increase their earnings by up to £5,000 in any 18-month period without the clawback of their tax credit entitlement.

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