Name of Consultation: 21st Century Welfare
Consulting organisation: DWP
Closing date: 1 October 2010
Further information: http://www.dwp.gov.uk/consultations/2010/21st-century-welfare/
Address for responses: benefit.reform@dwp.gsi.gov.uk

Iain Duncan Smith, the Secretary of State for Work and Pensions, has set out his plans to completely change the benefits system in the paper 21st Century Welfare. He proposes to help people move into work by letting them keep more of their earnings. There would be a major reform of the range of credits and benefits available, and tapers might apply as people start and progress in their work. The proposals for a simpler benefits system aim to bring together parts of the current benefits and Tax Credit systems; simplify the financial help available to people both in and out of work; and allow extra support for things like housing, children and disability. There will be a consultation period on these changes from 30 July 2010 until 1 October 2010.

The paper seeks views on a range of options including:

* a universal credit that brings together existing income-related out-of-work benefits and Tax Credits into a simpler, integrated system that supports people in and out of work. Entitlements would be based on current benefit and Tax Credit rules, with amounts for individuals, couples, children, housing, disability or caring. The total would then be reduced for earnings and other income to produce the net amount payable.
* the use of disregards and tapers to reduce the universal credit as earnings increase above a threshold
* maintaining separate out-of-work benefits and tax credits but using a single taper
* using a Single Working Age Benefit as a simple flat rate benefit that would give all working age claimants the same level of replacement income, regardless of whether they were jobseekers, lone parents, sick or disabled
* The Mirrlees model, which could replace Child Tax Credit, Working Tax Credit, Income Support/Jobseeker’s Allowance, Housing Benefit, Council Tax Benefit and Child Benefit with an integrated ‘family allowance’ paid directly into bank accounts and withdrawn using the withholding system for Income Tax
* A single benefit and the introduction of a negative income tax to replace current income-replacement benefits and tax credits.


Consultation questions
1. What steps should the Government consider to reduce the cost of the welfare system and reduce welfare dependency and poverty?
2. Which aspects of the current benefits and Tax Credits system in particular lead to the widely held view that work does not pay for benefit recipients?
3. To what extent is the complexity of the system deterring some people from moving into work?
4. To what extent is structural reform needed to deliver customer service improvements, drive down administration costs and cut the levels of error, overpayments and fraud?
5. Has the Government identified the right set of principles to use to guide reform?
6. Would an approach along the lines of the models set out in chapter 3 improve work incentives and hence help the Government to reduce costs and tackle welfare dependency and poverty? Which elements would be most successful? What other approaches should the Government consider?
7. Do you think we should increase the obligations on benefit claimants who can work to take the steps necessary to seek and enter work?
8. Do you think that we should have a system of conditionality which aims to maximise the amount of work a person does, consistent with their personal circumstances?
9. If you agree that there should be greater localism what local flexibility would be required to deliver this?
10. The Government is committed to delivering more affordable homes. How could reform best be implemented to ensure providers can continue to deliver the new homes we need and maintain the existing affordable homes?
11. What would be the best way to organise delivery of a reformed system to achieve improvements in outcomes, customer service and efficiency?
12. Is there anything else you would like to tell us about the proposals in this document?