Universal credit rollout is still concerning but the new welfare system should help encourage people to work once it has been fully introduced

Hayley Kirton
Follow Hayley
"The potential gains from simplifying the working-age benefit system remain mostly intact" (Source: Getty)

While MPs are concerned about how universal credit is being rolled out, economists think the new system helps to encourage people into work.

A report released today by the Institute for Fiscal Studies (IFS) has found that universal credit should encourage those who were disincentivised by the previous system to find employment.

However, the report also noted that preemptive cuts made to the credit would lower the level of support offered to working families.

"The long run effect of universal credit will be to reduce benefits for working families on average – a reversal of the original intention," commented Robert Joyce, associate director at the IFS. "However, the potential gains from simplifying the working-age benefit system remain mostly intact: universal credit should make the system easier to understand, ease transitions into and out of work, and largely get rid of the most extreme disincentives to work or to earn more created by the current system."

Read more: DWP accused of attempting to hide failings on universal credit reform

A separate report from the Public Accounts Committee (PAC), also released today, slams the way the new scheme is being introduced, criticising the Department for Work and Pensions (DWP) for the delays there have been in its implementation.

"DWP appears either unable or unwilling to level with parliament and the public about universal credit," remarked Meg Hillier, PAC chair. "This lack of clarity creates needless uncertainty for claimants and those tasked with running the programme."

Responding to the reports, a DWP spokesperson said:

Universal credit is transforming lives across the country, with claimants moving into work significantly faster and earning more than under the old system. Universal credit is on schedule and will be in all jobcentres by Spring. Once fully rolled out it will generate £6.7bn in economic benefit every year.

We welcome the IFS analysis which shows that universal credit will make work pay and increase financial incentives for people to work more, while also bringing the welfare bill under control.

However, Owen Smith, shadow work and pensions secretary, said that the IFS report left "Iain Duncan Smith’s claims for Universal Credit in tatters".

Read more: Universal credit is just the beginning of welfare reform

Smith continued: "Everyone can now see that successive cuts to Universal Credit have destroyed many of the work incentives that were supposed to be the very reason for the scheme, hitting single parents particularly hard."

Related articles