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Labour's commitment to "scrap" Universal Credit

With Brexit still casting its shadow over all else in politics, it would be easy to ignore other pressing issues, such as the future of Universal Credit.

In his speech to Labour's party conference, Jeremy Corbyn, outlined a Labour policy to introduce “emergency” changes to Universal Credit as part of a fundamental reform of the welfare system. 

In an immediate assessment, the Institute for Fiscal Studies has found that the specific proposals presented by Labour would increase incomes of a significant number of low-income families - and in some cases by £1000s per year. 

Reversing the two-child limit in means-tested benefits would mean that about 700,000 households with children would be better off than they would otherwise have been, by an average of £3,000 per year, with a cost of about £2bn per year.

Abolishing the benefits cap would benefit approximately 100,000 working-age families by an average of roughly £2,000 per year, costing around £200 million per year. 

The winners would be mostly people with several children or high housing costs or both. 

Other changes announced by Labour include an additional payment at the beginning of people's claims, to counter concerns that people are waiting for too long to receive their first payment; a switch to fortnightly rather than monthly payment frequency; paying the housing component directly to landlords; and splitting payments to couples between bank accounts rather than paying it all in to one bank account per family.

The IFS estimate these would make a real difference to many families.  
 
Tom Waters, IFS Research Economist,  has said:

"The proposals announced by Labour today would, compared to current policy plans, top up the incomes of a significant number of low-income households – in some cases by thousands of pounds per year. They do not, however, amount to anything close to a scrapping of universal credit."

The precise details of the proposed reform and "scrapping" universal credit are still to be revealed.  The introduction of Universal Credit inflicted severe hardship on hard-working families on benefits.  It was predicated on the assumption that recipients of benefit were "work-shy", yet the majority of the poorest in society are in hard-working families on low incomes.

Fundamental reforms need careful consideration before being introduced to avoid many of the problems of Universal Credit. 

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