A Labour MP has hit out at plans to dock the benefits of workers under Universal Credit which he says has almost “escaped notice”.
Michael Meacher, Labour MP for Oldham West and Royton, was citing research by the Resolution Foundation – published earlier this month – which estimates that nearly 1.2 million working adults will face losing some of their benefits under Universal Credit if they do not comply with new requirements to work longer hours, find an additional job or seek higher wages.
Universal Credit combines income-based benefits and tax credits into a unified monthly payment. However, the Foundation says the new system will create a “complex mix of winners and losers”.
Under UC, the criteria of 16 and 24 hours per/week for working tax credit eligibility will be scrapped and claimants will gain entitlement to an appropriate amount of in-work support for working any number of hours.
To counter the incentives for low-hours work, it’s introducing a system of personalised conditionality – directed mandatory activity to prepare for and obtain work and tough sanctions for non-compliance – including for claimants already in work.
Under the new system any claimant of working benefits is required to meet an earnings threshold equal to national minimum pay rates for a 35-hour week, to be earned if necessary through such combined measures as working longer hours, getting their employer to increase their hourly wage or getting an additional job on top of what they were already working.
Mr Meacher said on his blog: "It has almost escaped notice that next year the Government will be cutting benefits from those already in work – unless they can get extra work which may of course not be available."
He added: “The obvious question arises: is it fair to dock their in-work benefits because they’re earning such a low wage if, however hard they try, they can’t meet any of the new conditions being laid down? This is yet another of the impossible conditions being set by the coalition as an excuse to chop benefits.”
The Foundation estimates that some 700,000 single people plus a further 500,000 who are part of a couple will lose out if they earn less than the minimum wage which is currently £212 a week for a single person (assuming a 35 hour week).
The Department for Work and Pensions (DWP) has indicated that working claimants with earnings above a lower cut off will not be subject to UC’s intensive conditionality regime. However, the Foundation argues that the precise nature of the system that will underpin conditionality for working claimants “remains unclear”.
The think tank warned: “However, any extension of conditionality to working claimants raises a series of important questions. First, there is a question of timing. With economic recovery still faltering and some 1.4 million part-time workers finding themselves unable to increase their hours, the potential for pushing UC recipients above the conditionality thresholds looks questionable.
“Secondly, while a watered down in-work conditionality system may not require resources equivalent to those that the core conditionality regime requires – personalised support and advice from Jobcentre Plus advisors to help claimants to prepare for more work –serious resource implications remain.”
The transition to UC will begin by processing new claims from those out-of-work and will then proceed to process new claims for people in work from April 2014 with a view to completing the entire transition process by 2017.
In recognition of the need to consider carefully how to implement the in-work conditionality, it's understood the Government plans to run a series of pilots to build its understanding of the best approach.
A DWP spokesperson said: "Universal Credit will help people increase their hours and see a clear financial gain in work, but no one will lose out where caring responsibilities, illness or lack of jobs means full time work isn't possible for them. People who could work full-time but chose instead to have benefits top up their income should be encouraged to do more and we intend to run pilots to agree the best approach on this."