Department for Work and Pensions consults on plans to simplify the benefits system.
Article by Paymex 30th Jul 2010 00:00
Work and Pensions Secretary Iain Duncan Smith has set out plans to revolutionise the existing benefits system within a new Command Paper, 21st Century Welfare, publised for consultation today. The paper focuses on ensuring that work pays and plans include allowing people to keep more of what they earn as they move into work whilst withdrawing benefits at a single, more reasonable rate as people start to earn more money.
The options in the document could see a major reform of the number and type of Tax Credits and benefits available and the way in which they are withdrawn when people move and progress in the workplace, and would:
Combine elements of the current income-related benefits and Tax Credit systems
Bring out-of-work and in-work support together in a simpler system
Supplement monthly household earnings through credit payments reflecting circumstances (including children, housing and disability)
Department for Work and Pensions says the proposed system could improve incentives to get a job as people would see no reduction in their benefit until they earn over a certain level.
Although the foreword to the paper states that "The benefits system has shaped the decisions of the poorest in a way that has trapped generation after generation in a spiral of dependency and poverty." and that "The only way to make a sustainable difference is by tackling the root causes of poverty", including by addressing "…severe personal indebtedness", there are no specific proposals contained in the paper to improve the links between the benefits system and services to address debt problems.
Baines and Ernst Ltd