At-a-glance: Benefits overhaul

11 November 2010

Work and Pensions Secretary Iain Duncan Smith has set out details of his plan to scrap most out-of-work benefits and replace them with a Universal Credit. Here are the key points:

THE KEY POINTS:

•Replaces working tax credit, child tax credit, housing benefit, income support, jobseekers' allowance and income related allowances

•Low paid workers to keep more of what they earn

•Benefits cut for three months if job offers refused

•People can move in and out of work without losing benefits

•Starts for new claimants in 2013

•Will take up to 10 years to come fully into effect

•£2.1bn start up costs

•Meant to save money in the long run through reducing fraud and error

HOW IT WILL WORK

Claimants will receive a basic personal amount with additional sums for disability, caring costs, housing costs and children, with single people and couples getting different rates and, as now, the under 25s receiving less. Unlike now, people will not have to claim separately for different benefits. The amount claimants receive will also be calculated closer to "real time", with adjustments potentially made monthly rather than annually.

MAKING WORK PAY

As earnings rise, Universal Credit will be withdrawn at a rate of around 65p for every £1 of wages earned - higher than is presently the case.

HOW CLAIMS WILL BE MADE

Claims "will normally be made through the internet". Most claims will be dealt with automatically, leaving staff to focus on cases where there is a risk of fraud or error. The government say they expect "most subsequent contact between recipients and the delivery agency will also be conducted online". Claimants will be expected to manage their claims as they would an online bank account. They will also have to report significant changes of circumstances online. There will be support for the "minority" unable to use the online system.

REFUSING TO TAKE WORK

Failure to accept a reasonable job offer, failure to apply for a job or failure to attend Mandatory Work Activity will result in Jobseekers Allowance being stopped for at least three months. In the most "extrem" cases, "where benefit recipients have serially and deliberately breached conditions" benefits will be cut for three years - and claimants may not have access to hardship for the whole of that period to make up the shortfall.

BENEFIT CHEATS

"In the case of recipients who are convicted of criminal fraud, in addition to any sentence imposed by the court, the offender will also be subject to 'one strike' and 'two strike' regimes, which impose benefit deductions on recipients", says the white paper. That means a loss of benefits for three months for a first conviction and six months for a second. For the most serious and organised cases, benefit could be stopped for three years.

BENEFITS THAT WILL NOT BE SCRAPPED

•Disability living allowance

•Child benefit

•Contributory Jobseekers Allowance (paid for the first six months of unemployment out of National Insurance contributions)

•Statutory sick pay

•Maternity pay and maternity allowance

•Industrial injuries disablement allowance

WHEN IT WILL COME INTO FORCE

The new rules are likely to come into force for new claimants by 2013, with a target of migrating all recipients onto it in the first few years of the next Parliament after 2015.