The Parliamentary Under-Secretary of State for Work and Pensions (Maria Miller)
Universal credit has been designed to ensure that people are better off in work. The benefit will be for claimants both in and out of work, and will enable a smooth transition into work.
Universal credit will improve work incentives as financial support will be reduced at a consistent and predictable rate for claimants moving into work or increasing their working hours. People will generally keep a higher proportion of their earnings. The intention is that any work pays, in particular, low-hours work. Reducing the complexity of the current system and removing the distinction between in-work and out-of-work support, will make clear the potential gains to work and reduce the risks associated with moves into employment.
The new in-work incentives of universal credit mean that some current measures are not needed. To this effect, I am announcing today that the Government intend to end the following payments to prepare the ground for the introduction of universal credit. The payments will be removed beforehand to aid a smoother migration into the new system.
Job grant; a one-off payment made to eligible claimants who leave benefits to start work. Claimants must have been on benefits for at least 26 weeks.
In-work credit; a weekly payment made to eligible lone parents who leave benefits to start work. Claimants must have been on benefits for at least one year and can receive payments for up to 52 weeks.
Return-to-work credit; a weekly payment made to eligible claimants with a health condition or disability who leave benefits to start work. Claimants must have been on benefits for at least 13 weeks and can receive payments for up to 52 weeks.
Under universal credit, in-work support will be part of the benefit system. In this context, we do not believe that cash payments based solely on the amount of time a person has spent on benefit regardless of actual need make sense. Universal credit will provide in-work incentives to all who receive it rather than these specific groups and allow us to target help more effectively.
These payments will start to be phased out for new benefit claimants from October 2012; payments can continue into 2013 for those eligible. Further information will be made available shortly for those affected.