North West to benefit from Universal Credit
Lord Freud has outlined how businesses may benefit from soon-to-be-launched Universal Credit payments, after a visit to Wigan and Warrington.
Universal Credit is a single payment for low wage-earners or job seekers, which will aim to give claimants greater independence and will soon be launched in areas around the North West region.
The measures will be brought in for claimants across the country in October 2013, while job seekers in parts of Greater Manchester and Cheshire will be able to receive Universal Credit from April 2013.
The scheme will allow greater flexibility for both employers and potential workers who are currently receiving benefits but are restricted by rules around the number of hours they can work.
The main aim of the scheme is to allow claimants to move in and out of work and increase their hours, while employers will be able to fill temporary vacancies more easily.
Conservative peer Lord Freud, who is in charge of reform in the benefits system, gave his opinion on how Universal Credit will bring about important benefits for businesses in the North West.
He said: “On my recent visit to Jobcentres in Wigan and Warrington local employers made it clear to me that a flexible workforce helps them grow their business and will help to boost the wider local economy.
“Shortly Universal Credit will launch in parts of the Greater Manchester and Cheshire area, increasing in scope over time. This new benefit will significantly help local employers by removing the ‘16 hour’ rule that can limit the flexibility of their employees.
“In the current system inflexible hours rules trap many people on benefits and lock others out of tax credits. This creates problems for employers hiring contract workers and part-time staff who often restrict their working hours in order to keep their existing benefits, even where they would be better off if they worked more.
“Under Universal Credit all this inflexibility and complexity will be swept away. Everyone on Universal Credit benefits from a work allowance – an amount of money they can keep without any reduction in their Universal Credit payment. There is then a gradual reduction of their benefits for every pound earned above the work allowance.
“This means a person’s payment is not suddenly stopped if they work more or less than 16 hours a week. It ensures work will pay more than benefits - encouraging more people back into work and rewarding them for every extra hour they do.
“This is real, practical help for local employers in the North West, a move which will give them access to a more flexible workforce. We’re getting rid of an absurd system where people find themselves worse off when they wish to work more, but are penalised for doing so. Universal Credit will allow people to keep more of their benefit and see the clear benefits of increasing their hours.
“Universal Credit will use the Real Time Information system which HMRC are now rolling out to employers. This system allows companies to report Pay As You Earn information to HMRC in real time.
“It will mean that Universal Credit payments can be automatically adjusted according to a claimant’s earnings, so if someone earns a bit less in one month their Universal Credit would increase and vice versa.
“I’ve been greatly impressed by the response of the employers I met in Wigan and Warrington to Universal Credit. They recognise that by removing complexity from the welfare system we make it easier to recruit a motivated and flexible workforce that can help them to grow their business.
“Universal Credit will be good for individuals and good for business in the North West.”