Advantages and Disadvantages of the Universal Credit Approach - Essay Example

?Topic: Current Coalition government’s approach to welfare reform XXXXXXXX XXXXXX XXXXXX XXXXXXXX XXXXXXXXX Introduction The White Paper, Universal Credit: Welfare that Works, presents the main point to be reformed in the benefits system. The reason to create the changes is remove many financial barriers which are plenty in the system that is available. The rationale of the system is to ensure that there are returns from works done and so to encourage people to see that work is the main outlet from poverty. This will improve the people livelihoods thus raising the country’s per capita income. It will basically restructure the way in which benefits are calculated. It improves work incentives by ensuring that individual keep more of their incomes from work by introducing a smooth and transparent reduction of their benefits. The rationale is to improve work incentives by getting rid of the wrong features of the prevailing system. The reduction of benefits leads to a reduction in interaction with agencies thus smoothing the transition to work. The customers will therefore be in a better position to understand their entitlements, making it easy to administer and reducing fraud. The changes in the benefit calculation will restructure the forms of allocations leading to greater simplification of the system, thus an allocation of ?2bn. This will lead to income increase due to reduced fraud and error. As a result, there will be re-distribution of income to households with low incomes which is the long-run net achievement. Eventually, the reduced complexity leads to increased saving in administration costs. The approach will have a great impact on poverty which is a major vice in many states. This is as a result of reallocation of entitlements on low income in-work families and because the approach is simple and leads to a rise in take-up as compared to the current system of benefits and tax credits. The simplicity of the system will invoke less crime in relation to error and fraud. Other areas the approach will have positive results is in relation to: fiscal costs and savings, individual entitlements, benefits entitlements, take-up, income, time and protection. Strengths of Universal Credit One of the other major important strength of the universal credit is that it is caring. The government has been very committed in ensuring that disabled people are fully engaged in the society which included remaining at the work place or coming back wherever feasible. This model was introduced in 2008 for employment and support allowance and it has worked well. It provides extra beneficial components for employees in their work related activities and has supported work groups (Great Britain: Department for Work and Relations, 2010). Cares have continuously been providing an invaluable service to some of the most susceptible people in our communities and the Government has ensured that they the full support they require. According to universal credit the cares will continue to be entitled to national Insurance Credits, to ensure that their financial positions in time of retirement. The government has carefully considered the changes to care’s allowance .It was seriously taken into account during the introduction of the universal credit which has given cares a clearer and a very efficient support for cares. Secondly, a considerable amount of money was added to the universal credit award to assist in meeting cost of mortgage interest and rent. The rent support which was previously given through Housing Benefit has been replaced by Universal credit. This is to aim at providing a more simplified way of providing rent support through Universal Credit in the best way possible. This has protected the vulnerable people from bad encounters such as having large amounts of arrears or being made to remain without homes. This is achieved through allocation of funds specifically to support the citizens in the private–rented sector at levels that have generally made market of rents affordable (Great Britain: Department for Work and Relations, 2010). For the social-rented sector tenants the cutting down of the houses expenditures has built a great support which was provided by the Housing benefit System. Thirdly, the merit of paying the housing components to individuals encourages the disabled people to manage their own budget just as other households do. There was also a stable rental income given to social landlords to ensure availability of new homes hence protecting their financial positions through direct payments to landlords. It is believed that universal credit principles should be in a good position to provide support more efficiently hence providing avenue for exploring wide range of options. In addition to this, maximum protection of the marginalized the susceptible people in the society will be increased. This will be very essential in making it sure that, local authorities make use of household data collected by the work of departments and pensions department through universal credit systems, instead of asking individuals to provide a lot of information about their earnings and savings repeatedly. On the other hand the government is so much determined to cater for monetary support the unfortunate families required to cater for children’s costs of living .The government has considered a structure for disabled children in universal credit approach (Grover, 2010, pg. 146). It brings about a more comprehensive impact on people in terms of payments, such that the employed and the unemployed will be treated the same way. Weaknesses In the case where the financial returns are minimal, the deductions will be many. Increase in earnings will be reduced from their benefits credits which may be very high in various circumstances. The reductions may be unpredictable due to level of the earnings and the mixtures of both the benefits and the tax credits received. Another weakness is that the incentives to work may lack and the system is very complex leading to more administration costs. There are also separate systems for in and out of work which leads to major delays and gaps in payments (Gregg and Harknes, 2003, pg. 52). Due to this, many people are not prepared to take the risk of moving into to work so as to gain. Every society may to some extend contain physically challenged people who may experience discrimination based on their status quo (Blundell, Brewer and Shephard, 2005, pg. 191). The disability prejudice in many societies is a fundamental force that excludes the people with disabilities from the many available social and economic opportunities. It is argued that disability is not truly dealt with in most political, social and legal scenario and thus the government through the law has enhanced anti- disability laws. These ensure that the physically challenged are protected against certain elements of behaviour. This involves the elimination of the social barriers whether they are physical, social, financial or psychological which may hinder the disabled from full participation in the societal activities. The international human rights tribunals have in most cases shown a great willingness in the past years to understand the most common human rights instruments in a way that shows the failure to recognize human rights to people with disabilities is a clear violation of international (Cabinet Office, May 2010). The government to be effective and very sustainable has used the capital from public investments to reduce the poor state of many households by transferring money from those who have and channelling it to them that lack. This is achieved through taxation and the construction of social amenities in the poor zones. However this has not had a major effect since most areas lack structures and much more in places bearing the physically challenged which are more likely to be disadvantaged. The government under the approach is committed to giving support to the physically challenged so as to equip them with skills for survival (Great Britain: Parliament: House of Commons, 2011). They will also be able to contribute to projects and take part in developmental programs in the societies. This provides additional beneficial elements as people in the groups gain support irrespective of their capability or physical status. This method is better than that of overlapping disability returns and payments premiums since the latter brings confusion. The government thus needs to consider what extra support is needed under the universal credit method to supplement the groups. Conclusion The universal credit approach to a great extend has its improvement though it’s opposite effects can be said to be equally devastating. The approach was formulated to mainly protect the people from poverty, but it has also had bad causes by trapping the families to the very condition it was supposed to alleviate. This in return has led to a waste of the countries resources as well as human potential and thus has increased the cost which exceeds the monetary benefits. The Universal Credit welfare announced by the state in the Budget and Spending Review seeks to make a fair and affordable system. The approach of the people welfare seeks to reform and create an improvement in the work incentives and into work sector. This is to be achieved by extending support and conditionality as well as bringing the parts of the system that is not working up and to the best level. In the long run, the state will ensure that the welfare of the people is improved and especially with the concern for the physically challenged. This will not only improve the savings in individual households, but it will also raise the per capita income. References Barbour A, 2008, Work Incentives in the Benefit System: Increasing Levels of Earnings Disregards, Community Links Evidence Paper No. 12; SPARK Research, 2004, A Review of the DWP Benefit Fraud Sanctions Regime, Department for Work and Pensions In-house report. Blundell R, Brewer M and Shephard A, 2005, Evaluating the labour market impact of Working Families Tax Credit using difference-in-differences HM Revenue & Customs Working Paper 4. Browne J and Paull G, 2010, Parent’s work entry, progression and retention and child poverty, Department for Work and Pensions Research Report No. 626. Community Links, Low Incomes Tax Reform Group, 2007, Interact: benefits, Tax Credits and moving into work, CPAG; Royston S, 2007, Benefit simplification and the recipient, Department for Work and Pensions; Sainsbury R and Weston K, 2010, Exploratory qualitative research on the ‘Single Working Age Benefit’ Department for Work and Pensions Research Report No. 659. Cabinet Office, May 2010, State of the nation report: poverty, worklessness and welfare dependency in the UK. Cabinet Office, 2009, Understanding the risks of social exclusion across the life course: Families with Children. Social Exclusion Task Force. Great Britain: Department for Work and Relations, 2010, Universal Credit: Welfare that works, London, The Stationery Office. Great Britain: Parliament: House of Commons, 2011, Welfare Reform Bill, London: The Stationery Office. Gregg P and Harkness S, June 2003, Welfare reform and lone parents employment in the UK. CMPO working paper. series no. 03/072. Grover, C., 2010, The Social Fund 20 Years OO: Historical and Policy Aspects of Loaning Social Security, London, Ashgate Publishing. House of Commons, 2010, Work and Pensions Committee: White Paper on Universal Credit, London: The Stationery Office. HM Revenue & Customs and Department for Work and Pensions, October 2010, Tackling Fraud and Error in the benefit and tax credit system. Riley and Young, December 2000, New Deal for Young People: Implications for Employment and the Public Finances, Employment Service Research Report 062. The Pensions Act 2008, introduced measures aimed at encouraging greater private saving which includes work-place pension reform due to come into effect in 2012. Turley C and Thomas A, September 2006, Housing Benefit and Council Tax Benefit as in-work benefits: Claimants’ and advisors’ knowledge, attitudes and experiences, Department for Work and Pensions Report 383. Read More