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The government should concentrate on encouraging take-up of Universal Credit to save the reputation of the controversial benefit system as it enters its final implementation phase.
That call has come from the Resolution Foundation think tank, in a report titled The Benefits of Moving.
It said the simplified Universal Credit had originally enjoyed wide support for offering improved financial incentives and higher-take up.
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These factors though had been undermined by the 2015 summer Budget’s reduction in its generosity, meaning benefits tapered quicker when earnigns increased, and by weak financial incentives for single parents and second earners to enter work.
Encouraging higher take-up of benefits than the system it replaced must therefore be a top priority for government as potential gains would be significant, with the Office of Budget Responsibility having estimated that 700,000 families could gain around £2.9bn in total.
Resolution Foundation senior economic analyst David Finch said: “Universal Credit enjoyed almost universal support when it was first announced. But its reputation has been undermined in recent years by significant cuts and payment delays that have left too many claimants in difficult financial straits.
“But despite these problems, the rollout of Universal Credit is still going ahead and is in fact about to enter its most difficult phase as two million families already claiming benefits start to be moved onto the new system – including one million just about managing families.”
Finch warned that if this process was mishandled, UC would risk its reputation “taking another battering” with some families deterred from claiming.
Parliament is due to vote this autumn on details of the final phase, which the foundation said would be the most difficult of all because it involved ‘managed migration’ – people that have not chosen to apply for the new benefit.
It urged the government to speed up payments so that 90% of new claims were paid on time before it began the managed migration process.
By last February only 83% claims were paid in full and on time, little changed since June 2017.
The state rather than individuals should bear any financial risk from teething problems in managed migration and no existing claim should be closed until a new UC claim was in place.
There should also be an earnings disregard for those forced to move onto Universal Credit to prevent claimants with volatile earnings from losing money in the transition, according to the report.