Universal Credit - Essay Example

?Universal Credit Table of Contents Introduction 3 Background Policy Review 3 Universal Credit 6 Universal Credit Critique 8 Conclusion 11 References12 Introduction The government of the United Kingdom has implemented varied polices as a part of post war initiatives to benefit people in promoting work and individual responsibility. Various forms of reform packages have been proposed by the government for the welfare and benefit of the system. These reforms have been executed post war i.e. after 1945 to bring about efficiency in the management and economic planning. The welfare reform package to be evaluated in this essay is universal credit which facilitates to make the tax system fairer by providing work opportunity with the right incentive and by protecting the society. Universal credit is a new reform which benefits people with the once-a-month payment policy and provides new job opportunities. The purpose of the reform package is to compensate the people for the development of the rights in the form of compensation and job providence (Social Security Advisory Committee, 2012). The purpose of the essay is to evaluate the state welfare through the reform packages such as “Universal Credit” and the policies implemented by the UK government post war. Background Policy Review Universal credit as a reform package in the UK signifies a substantial shift in delivering welfare to the people. Under the Welfare Reform Act, universal credit has been established. The family allowances, full employment benefits and the national health services were a few of the policies implemented in between the years 1945 to 1948 (Spicker, n.d.). Universal credit which has been implemented post war has emphasized the social policy area. The policy areas which helped in creating the universal credit policy include social policies covering employment, taxes and the level of poverty. Consequently, labour policies, health services, family allowances and the policy to derive full employment have acted as crucial social policies for the welfare in the post war era. These policies were formed to mitigate the issues which were faced due to the war. These policies were not being able to protect the welfare of the people as required. They were neither able to provide a full employment scenario nor were they able to facilitate health benefits to every individual. In order to mitigate concerns regarding health issues and employment, universal credit policy has been implemented. Universal credit as a post war policy is a combined income related and basic allowance scheme for the benefit of the family and children. It has been made accessible in both ‘in and out of work’ in order to replace the present benefits ‘Working Tax Credit’, ‘Child Tax Credit’, ‘Housing Benefit’, ‘Income-based Jobseeker’s Allowance’, ‘Income Support’ and ‘Income-related Employment and Support Allowance’ for better pay outs. These would lead to an increase in the financial work as well as render greater social benefits. This financial and social benefit would assist in increasing the on-going incentives due to the rise in the working hours. Due to integration of the policy, the prior work benefits are reduced and thus there will be no administrative barrier for employment (Department for Work and Pensions, 2012). The social policies which had been introduced after the war were primarily not being able to demonstrate wider welfare. The policies were lacking in terms of work incentives, interaction benefits and transition to risk. The policies were not providing proper benefits. They had few loopholes which were causing issues. The social policies of the UK dealt with the areas of poverty, ill-health, unemployment, poor housing and lack of education. Post war the National Assistance Act was passed which was aimed at helping any individual of the working age. To meet the ill-effects of the war as well as to provide assistance, the supplementary benefit and unemployment scheme were enacted to aid people with jobs to meet their livelihood. With the growing demands of the people and the economic development of the country, “Social Security Contributions and Benefits Act” was imposed in 1992. Moreover, to improve the standard of living and build democracy, the housing policy was also implemented for the people to provide them shelter which was a necessity after the war. The income policy to improve the finances was assisting in providing a basic support to the people to improve their standard and increase the growth of economy. The family policy in the UK which was based on the social democracy hugely differentiated the men and the women. The men were treated as the major workers and children along with women were assumed to be dependent on the men. The policies were determined to provide financial help to the men to run their family. These policies were modified into a democratic form as women were given importance in the labour market. This brought about a change in the policies and labour government as the focus now shifted from familistic to individualistic (Finch, n.d.). This helped in increasing the rights and responsibilities of the people since post war. Several health Acts and social protection acts were implemented to protect the welfare of the state by protecting the health of the women and children. The child and working tax credit was implemented to facilitate disable people and low wages people to support their family. To provide right to the people was the primary aim of these policies by eradicating poverty, unemployment along with assisting the people with credit and tax benefits. Moreover, the ‘Conservative Policy’ was implemented in 1951 in the post war period by the government which desired to decrease the role of the state in allocating the land use in support of the market. The suggestion was debatable as it was creating problem for occupation and proper earnings (Finch, n.d.; Sefton CVS, 2012; The National Archives, n.d.). The policies since post war were not very successful as they largely assumed of making the economy fully employed as per the Keynesian theory which was not possible in practical terms. Consequently, Universal Credit was announced in coalition agreement in order to simplify the policies to showcase the benefits. This would allow people to get involved into more work and get the benefits because of the reform policy. To mitigate the issues of poverty and unemployment, universal credit was planned in order to reduce the level of poverty and employment (Gov.UK, 2013). Universal Credit Universal credit is a policy to support the people who are in search of job with one single payment. It aims in assisting individuals and their families to become independent along with providing working age benefits. Universal credit came to existence in October 2013, which was initiated by the Department for Work & Pensions (2Gov.UK, 2013; UPDATE - Disability Information Scotland, 2013). It was introduced as a part of the best reform policy as it encouraged people to initiate paid work. To ensure the transition to be smooth within the workforce, universal credit has been implemented. Universal credit has made the policy simplified and made it easier for the individuals to understand. The use of the single payment and policy for the welfare of the society has made it easier and cheaper for the administrators. Universal credit has been introduced in the UK to increase the prosperity of the country and the people by increasing their standard of living. Universal credit policy implemented has helped in reducing poverty and low income earners because of the amenities it provides. The single policy which is universal credit system has supported in maintaining the welfare of the society by avoiding fraud and errors (3Gov.UK, 2013). The aim of universal credit which is a part of the post war reform policy is to tackle the issues of work incentives for the poor within the new tax credit system. The motive of universal credit is to encourage individuals to take up work and reduce the issue regarding employment and make relevant payments. This system intends to offer a simple provision to replace multiple systems of the previous policies with an aim to reduce the administration cost and decrease the propensity of error and fraud. Moreover, it provides benefit to the users and helps to resolve the issue of poverty. The claimant for universal credit is low income earners, self-employed, partners and people within the age group between 16 and 17 (Department for Work and Pensions, 2012). The relevance of universal credit in the modern world to the changing welfare ideologies over the post war period for the welfare benefit is manifold. Universal credit is deemed to be provided to the people who have low income and no work. The people who do not have any kind of job will be supported with more incentives to keep up their livelihood. Additionally, people will be paid universal credit even when they start their employment in the initial time. Any claimant would be supported by paying the 1st month payment in the form of salary directly in the bank account. Support would be provided in the form of the housing cost as 1st monthly payment. Standard allowance, child element, housing element and payment are a few elements of Universal Credit Award. The benefits with regard to the policies are changing because of the universal credit system. The Disability Living Allowance was getting replaced by the Personal Independence payment for the individuals who are from 16 to 64 years of age. The council tax was abolished and swapped to localised support as well as local assistance scheme was introduced for the welfare of the people (3Gov.UK, 2013). Universal Credit Critique Universal credit has been implemented by the UK government to benefit people in terms of the issues such as poverty and unemployment. The low wage earners are to be benefitted through the universal credit policies but it is criticised by Kirkup (2013) highlighting that the programme is facing a huge loss due to mismanagement and delays. The idea of providing single benefit through the policy is also being criticised as the analyst suggests that the programme suffers from a lack of planning and poor management while providing the benefits. It is further stated by the analyst that the policy has no effectiveness for the tax payers and the ?34 million expended on the system has been written off (Kirkup, 2013). The policy which is a reform programme for the poor that is planned to benefit the people is criticised to ‘rot the soul’ of the low paid earners (BBC, 2012). Universal credit will reduce the level of poverty as per few analysts as it will ensure that the people are not out of finances and fraud along with errors are reduced. However, the critics fear that the policy might lead to worsen the situation of the individuals and might not work as planned. The benefit cap exempts families with disable persons as they receive the disability allowance. Such feature has also been criticised by the analysts. Universal credit can be claimed by the couple and the benefit will be provided to the single partner whereas earlier the tax credit benefit was provided to the mother only. This new policy of universal credit is critiqued as this might lead to decrease the incentive for the women (Mumsnet Limited, 2013; Blood Worth, 2013). Moreover, the policy of paying the money in a single payment is also not being accepted by the researchers. From their analysis, they have viewed that the single benefit would make the budgeting harder for the people as the claimant might run out of cash before the given period. An analysis of Institute for Fiscal Studies reveals that the new reformed policy will not be beneficial for the people who have the urge to work more and harder especially individuals who were being benefitted from the Working Tax Credit. The reason for such analysis is that marginal cost above 73% will reduce the level of incentive for the second earner which as per the analysts has an adverse effect for working harder (Blood Worth, 2013). It is emphasised by the researchers that the programme of universal credit will be an expensive regime which is nearly ?1.7 billion in the long run. Furthermore, if no family moved out of the universal credit policy, the cost of the government would increase which would exhibit the failure of the policy to improve the standard of living of the people. The critiques of the universal credit state that the policy would be effective for the poor and bring lesser benefit to the rich people on the basis of taxes (Brewer & et. al., 2011). In this regard, Watchdog’s report highlights that the program has received an early hindrance as certain payments have been delayed and the department has received no value for money invested through the universal credit policy. However, it is argued by the researchers that it has the potential to bring the changes as suggested through proper planning and discipline in the functions. The critique about the usage of the system suggests that the computer system used for the claimant might not be able to identify the fraudulent claims under the policy (BBC, 2013). It is analysed by the researchers that the universal credit policy faces a few same issues like the other reform welfare policies post war such as a lack of professionalism and secrecy in the culture of the programme. A few of the constraints faced by universal credit include its structural issues which in order to provide benefit to the people led to the adverse relation. It was argued by the researchers that the policy has certain loopholes such as benefit for one partner might lead to the fall in the benefit of the other (Brewer & et. al., 2011). Thus, it can be stated that universal credit welfare policy has several benefits for the people and the society as well as have few issues which need to be rectified in order to leverage decisive benefits for it. Conclusion Universal credit has been initiated in the UK to improve the quality of the previous policies and provide better benefit to the people. The motive of the new reformed policy is to establish a better society with reduced unemployment and poverty. The tax system and the single payment of the universal credit have been anticipated to provide benefits to the people. Several researchers have expressed various opinions about the policy. The policy has been initiated to assist the people and the economy. It can be concluded that welfare reform policies are a step taken by the government to support people with low income to maintain their finances for a better life since post war. In order to derive utmost benefits from such social policies, concerned authorities need to take into concern the prevailing gaps so that the policy can benefit a wider section of the society. References BBC, 2012. Universal Credit: Frank Field Warns Of 'Disaster'. News. [Online] Available at: http://www.bbc.co.uk/news/uk-politics-19555748 [Accessed December 28, 2013]. BBC, 2013. Universal Credit: Welfare Reform 'Poor Value' Watchdog Says. News. [Online] Available at: http://www.bbc.co.uk/news/uk-politics-23963867 [Accessed December 28, 2013]. Brewer, M & et. al., 2011. Universal Credit: A Preliminary Analysis. Institute For Fiscal Studies, pp. 1-68. Blood Worth, J., 2013. Five Things The Coalition Won’t Tell You About Universal Credit. Left Foot Forward. [Online] Available at: http://www.leftfootforward.org/2013/04/five-things-the-coalition-wont-tell-you-about-universal-credit/ [Accessed December 28, 2013]. Department for Work and Pensions, 2012. Universal Credit Evaluation Framework. Government, pp. 3-15. Finch, N., No Date. Family Policy in the UK. Welfare Policy And Employment In The Context Of Family Change, pp. 1-29. 1Gov.UK, 2013. Simplifying the Welfare System and Making Sure Work Pays. Policy. [Online] Available at: https://www.gov.uk/government/policies/simplifying-the-welfare-system-and-making-sure-work-pays [Accessed December 28, 2013]. 2Gov.UK, 2013. Universal Credit. Overview. [Online] Available at: https://www.gov.uk/universal-credit/overview [Accessed December 28, 2013]. 3Gov.UK, 2013. Simplifying The Welfare System And Making Sure Work Pays. Details. [Online] Available at: https://www.gov.uk/government/policies/simplifying-the-welfare-system-and-making-sure-work-pays/supporting-pages/introducing-universal-credit [Accessed December 28, 2013]. Kirkup, J., 2013. Universal Credit: 'Another ?200 Million Lost'. The Telegraph. [Online] Available at: http://www.telegraph.co.uk/news/politics/10303154/Universal-Credit-Another-200-million-lost.html [Accessed December 28, 2013]. Mumsnet Limited, 2013. Universal Credit. Family Money. [Online] Available at: http://www.mumsnet.com/family-money/universal-credit [Accessed December 28, 2013]. Sefton CVS, 2012. Summary Of Upcoming Welfare Reform And Social Policy Changes. News. [Online] Available at: http://www.seftoncvs.co.uk/index.php/news/50-news/798-summary-of-upcoming-welfare-reform-and-social-policy-changes [Accessed December 28, 2013]. Social Security Advisory Committee, 2012. Explanatory Memorandum for the Social Security Advisory Committee. Universal Credit Regulations, pp. 2-59. Spicker, P., No Date. An introduction to Social Policy. Social policy in the UK. [Online] Available at: http://www2.rgu.ac.uk/publicpolicy/introduction/uk.htm#UK%20government [Accessed December 28, 2013]. UPDATE - Disability Information Scotland, 2013. Universal Credit. Factsheet, pp. 1-12. The National Archives, No Date. Post-War Policy. The Cabinet Papers. [Online] Available at: http://www.nationalarchives.gov.uk/cabinetpapers/themes/post-war-policy.htm [Accessed December 28, 2013]. Read More