Iain Duncan Smith’s plans for a ‘Universal Credit’ aim to simplify the benefits system and make sure that people are better off in work. The principle is admirable, but we already know that IDS and his team aren’t very good at the detail of how to implement their ideas.

So it is no surprise to discover that a new report by Family Action estimates that Under the Universal Credit the financial benefits of progressing in work, through increased hours or pay, would be cut for many working families – from allowing them to keep 30p for each additional £1 they earn, to around 24p for each additional pound earned.

Family Action also estimates that as many as 1.35 million households could see work progression incentives cut under the Universal Credit, and that more tax paying, working households in receipt of means tested benefits could lose rather than gain work progression incentives under the new system.

Once childcare costs and council tax benefit are included, Family Action find that under some of the models proposed in the White Paper, calculations suggest that Marginal Deduction Rates could effectively exceed 100% for some families, (meaning claimants would lose money if they worked longer hours).

So despite claims that no one will be worse off as a result of the introduction of Universal Credit, it turns out the government are planning to spend more than £2 billion on setting up a Universal Credit which will actually increase tax rates and decrease incentives to progress in work for more than 1.3 million working families. What an utter fiasco.

Reader comments

1. Liberal Conspiracy

   Another IDS blunder: reforms to hit 1.35 million households http://bit.ly/cUqB1q

2. Don Paskini

   RT @libcon: Another IDS blunder: reforms to hit 1.35 million households http://bit.ly/cUqB1q

3. Don Paskini

   IDS said no one worse off w his universal credit plans. turns out by "no one", he meant "at least 1,350,000 households" http://bit.ly/cUqB1q

4. MD-G

   RT @libcon: Another IDS blunder: reforms to hit 1.35 million households http://bit.ly/cUqB1q

5. Brian Moylan

   RT @libcon: Another IDS blunder: reforms to hit 1.35 million households http://bit.ly/cUqB1q #cuts #cutswatch #ukpolitics #tories #labour

6. Dave Edwards

   Another IDS blunder: reforms to hit 1.35 million households http://t.co/ZPOzo6E

7. Rosemary

   RT @libcon: Another IDS blunder: reforms to hit 1.35 million households http://bit.ly/cUqB1q

8. Steve Chambers

   RT @snookcocker: Another IDS blunder: reforms to hit 1.35 million households http://t.co/ZPOzo6E "lose money if they worked longer hours"

9. Martin Togher

   RT @snookcocker: Another IDS blunder: reforms to hit 1.35 million households http://t.co/ZPOzo6E

10. North Briton

    RT @snookcocker: Another IDS blunder: reforms to hit 1.35 million households http://t.co/ZPOzo6E

11. Laura Blyth

    RT @libcon: Another IDS blunder: reforms to hit 1.35 million households http://bit.ly/cUqB1q

12. Emrys Schoemaker

    RT @donpaskini: IDS said no one worse off w his universal credit plans. turns out "no one", means "at least 1,350,000" http://bit.ly/cUqB1q

13. Elly M

    RT @libcon: Another IDS blunder: reforms to hit 1.35 million households http://bit.ly/cUqB1q

14. Rick Dutton

    RT @snookcocker: Another IDS blunder: reforms to hit 1.35 million households http://t.co/ZPOzo6E

15. Nick H.

    RT @libcon: Another IDS blunder: reforms to hit 1.35 million households http://bit.ly/cUqB1q

16. Pucci Dellanno

    RT @libcon: Another IDS blunder: reforms to hit 1.35 million households http://bit.ly/cUqB1q

17. Loraine Hardy

    Another IDS blunder: reforms to hit 1.35 million households | Liberal Conspiracy http://t.co/Jzq4rbv via @libcon

18. Jan Bennett

    RT @libcon: Another IDS blunder: reforms to hit 1.35 million households http://bit.ly/cUqB1q

19. welfarewatch.info :: The “Utter Fiasco” of the Universal Credit :: http://welfarewatch.info/blog

    [...] Read more…   [...]

20. Matt McG

    http://liberalconspiracy.org/2010/11/22/another-ids-blunder-reforms-to-hit-1-35-million-households/