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http://www.bbc.co.uk/news/uk-politics-12170003

Some 1.4 million families will lose money as a result of the government's reforms to simplify welfare, a think-tank has warned.

But the "universal credit", set to replace many benefits and tax credits, will help 2.5 million households, the Institute for Fiscal Studies said.

Among those losing out will be lone parents and families with savings of more than £16,000, its report added.

The government said universal credits would "make work pay".

It has promised that, under the new system, people will always be better off in work than on benefits.

There would be stricter rules for people losing their payments if they refused a job, with those who do so three times losing their benefits for three months.

The government also says it needs to streamline an over-complex system, with universal credits being introduced from 2013.

'Constraints'

In its report the Institute for Fiscal Studies (IFS) said the change would create clear "winners and losers".

It calculated that 2.5 million families would gain in the long-run and 1.4 million would lose, while 2.5 million would see no change to their benefit and tax credit entitlements.

The IFS said that, while the universal credit would create stronger incentives for single adults and the main earners in couples to work, it would weaken the incentives for both partners in a couple to find jobs.

The changes would benefit poorer families more than the better off, with the poorest six tenths gaining on average while the richest four tenths lost out slightly.

The IFS said couples with children would gain more than couples without children who would, in turn, do better than single adults without children. However lone parents would, on average, be worse off.

The report stressed that within all family types some people would be worse off, such as couples with children who have savings of more than £16,000.

BBC News Channel chief political correspondent Laura Kuenssberg said the report's findings could raise some difficult questions for the government.

In November Work and Pensions Secretary Iain Duncan Smith told MPs: "We will financially protect those who move across to the universal credit system. There will be no losers."

A government source said no-one who currently claimed benefit would see a cut in the level of their payments.

The IFS estimates that the universal credit will cost around £1.7bn, although that could rise if the simplified system results in a higher take-up rate.

'Cannot wait'

But the costs could fall if, as intended, the system encourages more people to take jobs.

IFS deputy director Mike Brewer said: "Our analysis illustrates the constraints all governments face when contemplating radical welfare reform.

"Work incentives will be strengthened for some, but weakened for others, and the reform will lead to both winners and losers in the long-run."

The Department for Work and Pensions said the universal credit had been designed to "make work pay".

A spokesman said: "Our reforms will move 350,000 children and 500,000 adults out of poverty. This will change Britain for generations - a change we cannot wait any longer for."

For Labour, shadow work and pensions secretary Douglas Alexander said the analysis suggested there were "clear potential benefits" to the universal credit, but added: "The more immediate issue is that government cuts from this April will see tax credits withdrawn faster and support for childcare for working families cut back."

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Appalling bias in the headline. Why not highlight the 2.5m it will help or the fact that 6 out of 10 of the poorest families will be better off. And why it is a bad thing to discourage both parents from working. IMHO, an ideal society would be one where a family can live off one wage (be it male or female) so the kids have a parent at home and get the attention they need.

Anyway, I think this is good news. The reform is long overdue.

Edited by FaFa!

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I'm not on benefits at the moment but I'm gearing up for these changes.Either the wife or I should be able to work part time while the other does child care. In the 2.5 years before it starts we should be able to buy our council house as there will be no HB (?) just Universal Credit (?)

Anyway, we'll see what happens, frankly I don't think IDS has a clue.

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I wonder how the IFS work all this out. I havent seen any details of what is proposed.

Biggest problem at the moment is that if you increase benefits for many, then those working and not obtaining any benefits at the moment are going to be in a relatively worse position than they are now. It is important that not only are people who are on benefits better off working, but those who are not on benefits are better off working as well.

If the system is as good as I hope it is, then it should pay for itself with the change in the way people behave. If it causes people to take up work in the taxed economy, then the reduction in welfare and the increase in taxes will pay for its increased generosity.

Another way of doing the same thing, though more brutally, is just to reduce benefits.

If I assume IDS knows what he is doing, and the system is a good one, the only doubt left is does the UK economy have enough time before these changes are introduced, before we have a debt market meltdown. If that happens, the other way of making work pay, might have to be introduced.

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Tories are all work and no action when it comes to welfare reform Thatcher used to threaten things in the 1980's but it never came to anything.

The harsh reality is this: if they cut back benefits, crime will go up ten times more to compensate. It's easier to pay 65 quid a week, than have the unemployed steal 650 quids worth of car radios and sell them on for 10% of their value. People will commit crime rather than starve.

The only thing the Tories could do is pay less for housing benefit. But they won't do that, first because the landlords are all Tories and second because housing benefit props up the housing market.

They could try cutting off benefits for non EU immigrants, but I doubt they'll do that either because it sounds racist.

They could cut pensions, because they're a ponzi scheme, but pensioners are mostly Tory so that's out.

They could cut middle class benefits, like child benefit, winter fuel etc for the better off, but then that will affect Tories too so they've ruled that out.

So that leaves only 2 things AFAICS: 1. reclassifying all on incapacity benefit as fit to work (thus reducing their benefits from 100 plus quid a week to 65 quid) and 2. Sacking staff.

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I wonder how the IFS work all this out. I havent seen any details of what is proposed.

Biggest problem at the moment is that if you increase benefits for many, then those working and not obtaining any benefits at the moment are going to be in a relatively worse position than they are now. It is important that not only are people who are on benefits better off working, but those who are not on benefits are better off working as well.

If the system is as good as I hope it is, then it should pay for itself with the change in the way people behave. If it causes people to take up work in the taxed economy, then the reduction in welfare and the increase in taxes will pay for its increased generosity.

Another way of doing the same thing, though more brutally, is just to reduce benefits.

If I assume IDS knows what he is doing, and the system is a good one, the only doubt left is does the UK economy have enough time before these changes are introduced, before we have a debt market meltdown. If that happens, the other way of making work pay, might have to be introduced.

I like the idea of universal benefit which everyone receives equally. The amount would be enough to eek out an existence but no more, something in the region of £150/per person/per week. This would be the only benefit available to all for all. If you want more money, go get a job.

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Tories are all work and no action when it comes to welfare reform Thatcher used to threaten things in the 1980's but it never came to anything.

The harsh reality is this: if they cut back benefits, crime will go up ten times more to compensate. It's easier to pay 65 quid a week, than have the unemployed steal 650 quids worth of car radios and sell them on for 10% of their value. People will commit crime rather than starve.

The only thing the Tories could do is pay less for housing benefit. But they won't do that, first because the landlords are all Tories and second because housing benefit props up the housing market.

They could try cutting off benefits for non EU immigrants, but I doubt they'll do that either because it sounds racist.

They could cut pensions, because they're a ponzi scheme, but pensioners are mostly Tory so that's out.

They could cut middle class benefits, like child benefit, winter fuel etc for the better off, but then that will affect Tories too so they've ruled that out.

So that leaves only 2 things AFAICS: 1. reclassifying all on incapacity benefit as fit to work (thus reducing their benefits from 100 plus quid a week to 65 quid) and 2. Sacking staff.

they should revert SMI for new claimants to how it was...9 months wait.and interest only paid on the first 100K for first mortgages only.

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I like the idea of universal benefit which everyone receives equally. The amount would be enough to eek out an existence but no more, something in the region of £150/per person/per week. This would be the only benefit available to all for all. If you want more money, go get a job.

Odyssues,

This has been discussed before. I can see no flaw in theory with the plan, though it would take about 5 years to bring in. You would need some determined leadership to see it through, and you would get loads of political flak for doing things like selling all the council houses and ending child benefit and free school meals and whatever else you need to get rid of. State Pensions have to go to, people retire when they chose, not when the benefit kicks in at 65 like it does at present.

Know anyone with enought political balls to carry out this sort of policy?

But it would work, no doubt about it. Perhaps the best way of introducing it is after a state default, when benefits have to be cut to the bone anyway. Then all the horrible things that people would say you are going to do, wouldnt sound so bad, as no one would be receiving anything other than negligible benefits anyway.

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Odyssues,

This has been discussed before. I can see no flaw in theory with the plan, though it would take about 5 years to bring in. You would need some determined leadership to see it through, and you would get loads of political flak for doing things like selling all the council houses and ending child benefit and free school meals and whatever else you need to get rid of. State Pensions have to go to, people retire when they chose, not when the benefit kicks in at 65 like it does at present.

Know anyone with enought political balls to carry out this sort of policy?

But it would work, no doubt about it. Perhaps the best way of introducing it is after a state default, when benefits have to be cut to the bone anyway. Then all the horrible things that people would say you are going to do, wouldnt sound so bad, as no one would be receiving anything other than negligible benefits anyway.

Thanks for the insight. I'll look for the old thread.

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......

So that leaves only 2 things AFAICS: 1. reclassifying all on incapacity benefit as fit to work (thus reducing their benefits from 100 plus quid a week to 65 quid) and 2. Sacking staff.

OK so that's saved a couple of million or so what are you going to do about the other £150,000 million?

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This just sounds like more spending to me tbh and giving more to the poorest so I dont understand the negativity.

As far as I understood those refusing work were to lose jobseekers anyway so there is nothing new there.

People with over £16k in savings will lose some benefits and be worse off than currently. So what? why are people sat on £16k getting taxpayers money for free anyway?

The result is that 2.4 million will be given more money than they are now. More spending of money that we dont have.

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Is the universal credit just a different name for a citizen's income / negative income tax?

If so, IDS could be much more radical than we thought.

It was first proposed by Juliet Rhys-Williams when she was a member of the Liberal party and then later pushed by Milton Friedman so it seems to have support across a wide range of political ideologies.

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This just sounds like more spending to me tbh and giving more to the poorest so I dont understand the negativity.

As far as I understood those refusing work were to lose jobseekers anyway so there is nothing new there.

People with over £16k in savings will lose some benefits and be worse off than currently. So what? why are people sat on £16k getting taxpayers money for free anyway?

The result is that 2.4 million will be given more money than they are now. More spending of money that we dont have.

The only change with regards to the penalising jobseekers for refusing to work was increasing the potential length of the sanctions (AFAIK it's currently 2 week, 4 weeks and 6 months max, new regime looked like it was going to increase that to 4 weeks, 1 year, 3 years max although maybe there were some further intermediate steps)

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This just sounds like more spending to me tbh and giving more to the poorest so I dont understand the negativity.

As far as I understood those refusing work were to lose jobseekers anyway so there is nothing new there.

People with over £16k in savings will lose some benefits and be worse off than currently. So what? why are people sat on £16k getting taxpayers money for free anyway?

The result is that 2.4 million will be given more money than they are now. More spending of money that we dont have.

You really talk ****** at times!

Are you English?

Part of your wages are docked throughout your working life as an insurance against unemployment - you pay for your dole payments in advance!

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<snip>

Part of your wages are docked throughout your working life as an insurance against unemployment - you pay for your dole payments in advance!

We all know that this is completely untrue.

If taxes, NI etc etc were priced as an insurance policy rather than as a means for the state to expand its role, taxes, NI etc would all be massively cheaper for working people than they are at the moment. They are massively expensive because of the people who have never worked and all of the unproductive activities of the state.

Edited by LuckyOne

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Was working at a house today the man hasn't worked for 2 years his last job was a supervisor at a leading DIY warehouse the wife looked like she had never worked gave birth to her son 2 years ago they now live on more money via benefits than they got prior to the birth when the Dad gave up work to live on benefits

I couldn't get out of them their total package from the benefit agency but they got £540 a month from the state towards the rent 2 bed sxithole they had to put another £60 towards it fom their benefit allowance which they were very upset about.

True story must be multiplied thousands of times over in England

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You really talk ****** at times!

Are you English?

Part of your wages are docked throughout your working life as an insurance against unemployment - you pay for your dole payments in advance!

apart from that not being true what does it have to do with people that have more than £16k in savings getting full benefits?

fwiw I dont agree with people losing dole money if they refuse work as there are many circumstances that would leave them worse off. I would like to see the system changed so that people taking work do not end up worse off but keep a percentage of their dole/benefits give the incentive to work and make it worth while. The person taking a job would be better off and have more cash and the taxpayer would be better off as they would only be paying a % of benefit instead of the full ammount.

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they should revert SMI for new claimants to how it was...9 months wait.and interest only paid on the first 100K for first mortgages only.

Well, the current scheme is only "temporary" and was extended for another year recently, the idea being that it goes back to the old way after.

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apart from that not being true what does it have to do with people that have more than £16k in savings getting full benefits?

fwiw I dont agree with people losing dole money if they refuse work as there are many circumstances that would leave them worse off. I would like to see the system changed so that people taking work do not end up worse off but keep a percentage of their dole/benefits give the incentive to work and make it worth while. The person taking a job would be better off and have more cash and the taxpayer would be better off as they would only be paying a % of benefit instead of the full ammount.

And what about those doing the same job but who weren't on benefits before? They would get less than the one just coming from benefits to work? So how can it work that you get to keep some of your benefits when you start work?

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Well, the current [sMI] scheme is only "temporary" and was extended for another year recently, the idea being that it goes back to the old way after [...]

..."the housing market recovery is secured".

'Spending Review 2010 - Welfare reform':

http://nds.coi.gov.uk/content/detail.aspx?NewsAreaId=2&ReleaseID=416108&SubjectId=2

Extending for a further year the temporary measures to reduce the waiting period for new working age claimants to 13 weeks and increase in the limit on eligible mortgage capital to £200,000. These were due to expire in January 2010.

This offers continued support to homeowners until the housing market recovery is secured. 85,000 claimants will benefit from the waiting period remaining at 13 weeks, and about 14,000 will benefit from the increased capital limit.

Cost: £90 million over the next two years.

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And what about those doing the same job but who weren't on benefits before? They would get less than the one just coming from benefits to work? So how can it work that you get to keep some of your benefits when you start work?

hey, no one said it was fair, the welfare state isnt fair imo.

It would seem an injustice to someone working for the same wage and paying their own way but no more of an injustice than it is to every tax payer.

The end result is that it would lower our welfare liabilities and ease the tax burden for all. Paying 10% or 20% or even 50% of the benefit on top of a wage is still a substantial saving for the tax payer not to forget that the person now employed would also be paying tax.

Child tax credits or family credits or whatever they are called are effectively causing the situation that you describe anyway. No one knows if the worker stood next to them is receiving extra cash and benefits.

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Appalling bias in the headline. Why not highlight the 2.5m it will help or the fact that 6 out of 10 of the poorest families will be better off. And why it is a bad thing to discourage both parents from working. IMHO, an ideal society would be one where a family can live off one wage (be it male or female) so the kids have a parent at home and get the attention they need.

Anyway, I think this is good news. The reform is long overdue.

You expect the left wing media engine that is the BBC to give praise to the Tories? Not on yer life.

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