Millions to have benefits replaced with 'universal credit'

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Millions to have benefits replaced with 'universal credit'

Post by BASEL » Fri Oct 01, 2010 11:23 am


The decision represents a victory for Iain Duncan Smith, the Work and Pensions Secretary, in his lengthy battle with the Treasury over his plans to overhaul the welfare system, The Times reports.

Under the changes, housing benefit, income support, incapacity benefit and dozens of other payments will be swept away in a major reform programme intended to break the culture of welfare dependency by making work pay.

The new system will carry a guarantee that anyone taking a job will be better off than if they were on the dole, with claimants allowed to keep more of their benefits when they enter work or increase their hours.

Mr Duncan Smith has made clear that the introduction of the universal credit is essential to his reform plans, and will bring long-term savings as the overall welfare bill falls.

But he faced fierce resistance from the Treasury, which feared that making the changes would be costly at a time when it is seeking major spending cuts across Whitehall.

Chancellor George Osborne has made clear that the cost of benefits must come down to cushion the impact of the cuts on other frontline public services.

The Times reported that the Department for Work and Pensions (DWP) would be able to claim upfront a ''large chunk'' of the £9 billion annual savings which Mr Duncan Smith believes the new system will achieve through lower administration costs and reduced fraud.

A DWP spokesman said: ''We are working closely with the Treasury and any decisions will be made in the context of the spending review.

''We are all agreed on the urgent need to reform the welfare system and help more people into work and off benefits.''

But while Mr Duncan Smith appears to have reached a settlement with the Treasury, there is still no sign of a resolution of his fellow right-winger Liam Fox's bitter struggle over the defence budget.

The Defence Secretary has warned that the ''draconian'' cuts facing the services would have ''grave consequences'' for the Conservative Party and the Government, but his concerns were brushed aside yesterday by David Cameron who said his fears were ''unfounded''.
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