December 2010 Universal Credit Announced

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Following announcements in August about plan to reform the welfare system, The Government has now introduced legislation to create a new Universal Credit. 

Key elements will include


A basic personal amount with additional amounts for disability, caring responsibilities, housing costs and children


Income disregards for specific groups such as parents and people with a disability – to encourage people to take jobs even of a few hours a week if this is possible for them


Additional benefit components for people with disabilities similar to Employment Support Allowance


Children – fixed amounts will be included for children based on current Child Tax Credit and Child Benefit rates


Carers – further consideration to be given to whether clearer, more effective support is necessary


Housing Benefit will be replaced with an amount included in the universal credit to help meet the cost of rent


Local authorities will be given greater responsibility for deciding how best to help low income groups pay their council tax but there will also be a government imposed 10% reduction in council tax benefit expenditure from 2013


A single taper set at 65% - the rate at which benefits are reduced to take account of income


The award of Universal Credit will not exceed a maximum amount when combined with other non-Universal Credit payments such as contribution based Jobseekers Allowance.  The maximum  will not be greater than the median earnings for working families after tax and national insurance.


There will be four broad conditionality groups ranging from those with full conditionality (jobseekers)to those whose disability or health condition prevents them from working, carers, lone parents or lead carers with a child under the age of one.


A Welfare Reform Bill will be introduced in January 2011 and it is expected that Universal Credit will begin October 2013 with full transfer by October 2017.

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