The Coalition Welfare Reforms Explained

Coalition Welfare reforms

Job Seekers Allowance (JSA): The Department for Work and Pensions have set up schemes aimed at getting unemployed people back to work, it has caused much controversy Critics have dubbed the programmes as “Workfare”, likening them to unpaid labour, or forcing people to work for their benefits. To get people back to work by either Work Experience (November 2011, 34,200 people had started a Work Experience placement), Sector-based work academies, Mandatory Work Activity, Community Activity Programme and the Work Programme. JSA has been cut to at least £56.80 a week, varying on an individual’s situation.

Universal Credit: A new in- and out-of-work credit, which integrates six of the main out-of-work benefits. The aim is to increase incentives to work for the unemployed and to encourage longer hours for those working part-time. “The main differences between Universal Credit and the current welfare system are:

  • Universal Credit will be available to people who are in work and on a low income, as well as to those who are out of work
  • most people will apply online and manage their claim through an online account
  • Universal Credit will be responsive – as people on low incomes move in and out of work, they’ll get ongoing support, giving people more incentive to work for any period of time that is available
  • most claimants on low incomes will still be paid Universal Credit when they first start a new job or increase their part-time hours
  • claimants will receive just 1 monthly payment, paid into a bank account in the same way as a monthly salary
  • support with housing costs will go direct to the claimant as part of their monthly payment”

Many feel the policy has been a total failure is in serious trouble. The national rollout, originally intended for this October, has been delayed until next spring and will reach fewer towns. Many observers believe this disaster to be inevitable. Why? Because to work efficiently, benefits must, by necessity, be complicated.  Combining the distribution of benefits and collection of tax requires a gargantuan IT system, a system which is reportedly the problem here, just as it was with the ambitious, disastrous and ultimately – abandoned, NHS IT system, which cost £12.7bn. Universal credit also rolls out in a complex world. People could ruin a perfectly fine idea with their lack of online access and IT skills, which is causing further difficulties. The scale and cost will unnerve ministers, who are struggling to roll out the beleaguered £2.4bn universal credit system, and have admitted that they have already written off £34m on failed IT systems for the project, though departmental estimates suggest the total figure for write-offs could reach at least £140m.

Housing Benefit: Benefit for low income families to help pay for rent, controversial policy includes the ‘Bedroom Tax’ a reduction in housing benefit if the user has spare bedrooms. The government wants to cap housing benefit at £400-a-week for the largest homes or £290-a-week for two-bed flats. It will also cut the amount of the allowance so that it was pegged to the bottom third of rents in any borough. It is also agreed by many that the changes to housing benefit will increase homelessness, which has been the trend in recent years. The aim of the Bedroom tax is to tackle overcrowding and encourage a more efficient use of social housing. Working age housing benefit and unemployment claimants deemed to have one spare bedroom in social housing will lose 14% of their housing benefit and those with two or more spare bedrooms will lose 25%. An estimated 1m households with extra bedrooms are paid housing benefit. Critics say it is an inefficient policy as in the north of England, families with a spare rooms outnumber overcrowded families by three to one, so thousands will be hit with the tax when there is no local need for them to move. Two-thirds of the people hit by the bedroom tax are disabled. Saving £465m a year, as many as 660,000 people in social housing will lose an average of £728 a year.

Old Age Pensions (OAPs): Pensioners are to receive a flat-rate universal retirement payment of £140 a week The Work and Pensions Secretary will pledge to sweep away a host of complex rules and “fundamentally simplify” the basic state pension. Mr. Duncan’s Smith’s intervention represents the start of a Coalition drive to replace the existing state pension regime with a “single tier” retirement payment. Advocates of a single-tier pension say the higher cost could be funded by abolishing a range of secondary retirement measures, including means-tested pension credits, which cost taxpayers £6 billion year.  Pension age risen to 65 men 60 for women, due to rise again soon. These propose changes are challenged by critics saying the rise in pension age has happened too quickly and hits women in their late 50’s the hardest.