Select committee: Economic Affairs Committee
Conclusion 37
2nd Report - Universal Credit isn't working: proposals for reform
Published 31 Jul 2020
Paragraph 189
Economic Affairs Committee The economics of Universal Credit All items in this report Report on parliament.uk ↗ Inquiry on parliament.uk ↗
Conclusion (the committee's words)
Given the depth of the recession that is anticipated following the COVID-19 pandemic, getting people into work should be the DWP’s priority. We therefore recommend revisiting both the structure and the level of the work allowances. All claimants should have a work allowance, at a higher rate than currently, to allow them to keep more of their award as they move into work, including short-term or low-hours employment. Figures from the Institute for Fiscal Studies suggest that reintroducing a work allowance for all groups , and increasing it by £50 per month, would cost the DWP £1.3 billion per year .
From: Economic Affairs Committee, 2nd Report - Universal Credit isn't working: proposals for reform, paragraph 189, 31 July 2020
Government response
The government responded to the whole report on 13 October 2020 (deadline 30 September 2020).
Summary written by Accountability Index from the government's response. It is not the government's own words.The Government 'notes' the Committee's recommendations and says it is 'surprised by several of the Committee's observations', and in the areas covered below it does not take forward the main design changes proposed.
- On payment design, the Department says it "will not be taking this recommendation forward" on a three-month fixed award, and "will not be introducing this choice by default" of monthly or twice-monthly payment. It cites accuracy risks and preparation for monthly paid work.
- The Department states that "in 2021 we will be increasing the time over which an advance can be repaid to from 12 to 24 months". It "rejects" the proposed non-repayable two-week initial grant, citing fraud risk.
- The Department "does not accept" the recommendations on the two-child limit and on reducing the taper rate. It says it "keeps the taper rate under review".
- It "intend[s] to keep childcare support integrated as part of UC" and "does not publish estimates of UC take-up rates". On the benefit cap, it "acknowledges" the recommendation and says the statutory review "will happen at an appropriate time".