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Universal Credit: Good Start, More Needs to be Done

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The 29 April 2013 marks the day that Britain's new benefit, the Universal Credit, begins its slow process of piloting and roll out. Commentators who support the changes will focus on the simplification of the welfare system and improvement in work incentives that this new benefit will herald. Those worried about the impacts will wring their hands about likely difficulties with on-line claims, financial management and a small number of people who stand to receive less than under the current system.

Both of these groups have a point. Over several decades, constant government tinkering has led to the welfare state growing into a sprawling and confusing system with poor incentives to work for many families. The introduction of Universal Credit will go some way towards tackling those issues and will be a long-overdue rationalisation of an overly complex system. On the other hand, significant reforms and simplification will always come with difficulties: vulnerable people in genuine need may fall through the cracks and struggle to claim the support that they need. These difficulties warrant the slow roll out of Universal Credit and careful piloting that will provide important lessons to learn from before the benefit is rolled out nationally.

On balance, if those lessons are learned and sensible safeguards put in place, the introduction of Universal Credit will be a big step towards a fairer and more effective welfare system. However, the intent behind Universal Credit is much more ambitious than fair and effective. It has the goal of helping families increase their earnings while in work and supporting people to move into self-sufficiency, rather than relying continually on benefits. In short, it is a step-change in our approach to benefits and marks the end of decades of using welfare to paper over the cracks of a changing labour market

To realise this ambition the introduction of Universal Credit will need to go hand in hand with other fundamental reforms. In part, this process has already begun with broader welfare reform that has led to a re-drawing of the boundaries between the state and family life. For instance, the benefit cap and other cuts have made the welfare state less generous, while ensuring that families can receive significant levels of support in times of need. New tests for disability benefits will also ensure that support is targeted at those with the greatest needs and focus on trying to help people manage their conditions and move back to work.

These have been controversial reforms, but they only mark the start of what should be a decade of welfare reform. Future reforms must focus both on individual responsibilities and on improving state support as well as continuing to reform benefits.

On the side of responsibilities, more will need to be done to tighten requirements placed on benefit claimants in return for state support. For instance, with temporary and insecure work becoming more normal, people should be doing more to manage moves between jobs without relying on benefits as a stop-gap. The government should also be firm with those currently working short hours and claiming benefits, but who are able to work full-time.

These tighter requirements must then be backed up with better support. The government must accept that Jobcentre Plus is ineffective at helping people into sustainable work. In the first six months of a claim, just 38% of Jobseekers Allowance claimants currently find a job that lasts for over eight months. New measures of success, better incentives for advisors and much larger private and third sector involvement will be needed to improve this currently poor support.

Finally, more reform of benefits will be needed. The recession has shown us that the welfare state no-longer embodies the 'something for something' foundations on which it was built. Those falling on hard times who have contributed all of their lives through tax and national insurance see no greater support than those who have never worked and have always relied on the state. It is little wonder that public opinion has turned against the welfare state. To rectify this, the contributory principle should be strengthened so that those who have contributed should get a better deal.

The last 12 months have shown us that reforming welfare is always going to be difficult. The government has taken more than a few tentative steps, but to really create a legacy as the government that tackled welfare, it needs to turn those steps into leaps and bounds.