ianstone
10-01-2010, 03:33 PM
Bonfire of the benefits to save £9billion: Duncan Smith wins his battle with the Treasury over 'universal credit'
By Paul Bentley (http://www.dailymail.co.uk/home/search.html?s=y&authornamef=Paul+Bentley)
Last updated at 3:17 PM on 1st October 2010
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Housing benefit, income support and incapacity benefit to be axed
Searing tensions between Iain Duncan Smith and George Osborne took a new turn today with claims that the Welfare Secretary has 'won' his battle against the Treasury over reform.
Under a deal between the two ministers, millions of welfare claimants would see their benefits scrapped and replaced with a single 'universal credit'.
Housing benefit, income support, incapacity benefit and dozens of other payments would be swept away under an expensive replacement that Mr Duncan Smith has long argued for, but which ran into Treasury opposition.
http://i.dailymail.co.uk/i/pix/2010/10/01/article-1316724-0060E6BC00000258-692_224x418.jpg
http://i.dailymail.co.uk/i/pix/2010/10/01/article-1316724-0A255912000005DC-995_224x418.jpg
Scrapped: Iain Duncan Smith has persuaded Chancellor George Osborne that replacing benefits with a 'universal credit' will encourage more people to work rather than stay on the dole
However Mr Duncan Smith is now understood to have persuaded the Treasury to let him claim up front 'a large chunk' of some £9billion of potential savings.
His new system would carry a guarantee that anyone taking a job would be better off than if they were on the dole, through being allowed to keep more of their benefits.
The Chancellor fought the plans because he said they would cost too much to enforce at a time when Whitehall faces the most severe cuts for more than a generation. But The Times last night reported that Mr Duncan Smith has won the battle.
He will be allowed to claim up front 'a large chunk' of the expected £9billion of savings which he predicts can be made every year from lower administration costs and reduced fraud.
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Once the system is launched, it will be much more difficult to defraud because all details will be held on one system.
Currently it is relatively easy to claim benefits while working because they are administered by different systems.
And couples can pretend they are entitled to more benefits by saying they live apart.
It has yet to be decided whether child benefit be shelved. The decision is not expected until the Treasury reveals the full details of the £83billion worth of cuts in the spending review on October 20.
Means testing for child benefit, taxation or scrapping it for older children are all being considered as alternatives.
http://i.dailymail.co.uk/i/pix/2010/10/01/article-1316724-09886B16000005DC-205_468x457.jpg Mr Duncan Smith argued that a complete reworking of the system was required to offer an incentive to work for those caught in the benefits trap. Under the current system, people can be left worse if they choose to lose their benefits and instead take a job
The plans are expected to be announced at the Conservative Party conference next week.
Mr Duncan Smith's plans were backed overwhelmingly in a public consultation on 21st-century welfare.
He argued that a complete reworking of the system was required to offer an incentive to work for those caught in the benefits trap.
Under the current system, people can be left worse if they choose to lose their benefits and instead take a job.
The plans will cover only benefits for those of working age, and will not include pensions.
Officials are still discussing how quickly the benefit should be withdrawn when someone on the dole finds work.
A withdrawal rate of between 60 and 65 per cent is being debated, according to sources.
That would mean that people will be able to keep between 60 and 65 per cent of their benefits for each extra pound that they earn once they go back to work.
Critics of the current system argue that there is presently little incentive to return to work.
Some 1.7 million people lose more than 70 per cent of their benefits for every pound earned and 130,000 lose 90 per cent.
The Institute for Fiscal Studies said the move, which comes into play in three years, 'could be one of the most important changes brought about by this Government'.
Read more: http://www.dailymail.co.uk/news/article-1316724/Bonfire-benefits-save-9bn-Duncan-Smith-wins-battle-Treasury.html#ixzz118ZXSSDc
By Paul Bentley (http://www.dailymail.co.uk/home/search.html?s=y&authornamef=Paul+Bentley)
Last updated at 3:17 PM on 1st October 2010
Comments (591) (http://www.dailymail.co.uk/news/article-1316724/Bonfire-benefits-save-9bn-Duncan-Smith-wins-battle-Treasury.html#comments)
Add to My Stories (http://www.dailymail.co.uk/news/article-1316724/Bonfire-benefits-save-9bn-Duncan-Smith-wins-battle-Treasury.html)
Housing benefit, income support and incapacity benefit to be axed
Searing tensions between Iain Duncan Smith and George Osborne took a new turn today with claims that the Welfare Secretary has 'won' his battle against the Treasury over reform.
Under a deal between the two ministers, millions of welfare claimants would see their benefits scrapped and replaced with a single 'universal credit'.
Housing benefit, income support, incapacity benefit and dozens of other payments would be swept away under an expensive replacement that Mr Duncan Smith has long argued for, but which ran into Treasury opposition.
http://i.dailymail.co.uk/i/pix/2010/10/01/article-1316724-0060E6BC00000258-692_224x418.jpg
http://i.dailymail.co.uk/i/pix/2010/10/01/article-1316724-0A255912000005DC-995_224x418.jpg
Scrapped: Iain Duncan Smith has persuaded Chancellor George Osborne that replacing benefits with a 'universal credit' will encourage more people to work rather than stay on the dole
However Mr Duncan Smith is now understood to have persuaded the Treasury to let him claim up front 'a large chunk' of some £9billion of potential savings.
His new system would carry a guarantee that anyone taking a job would be better off than if they were on the dole, through being allowed to keep more of their benefits.
The Chancellor fought the plans because he said they would cost too much to enforce at a time when Whitehall faces the most severe cuts for more than a generation. But The Times last night reported that Mr Duncan Smith has won the battle.
He will be allowed to claim up front 'a large chunk' of the expected £9billion of savings which he predicts can be made every year from lower administration costs and reduced fraud.
More...
Vince Cable warns of backlash against Brussels unless EU budget matches national austerity cuts (http://www.dailymail.co.uk/news/article-1316560/Vince-Cable-warns-Brussels-backlash-unless-EU-budget-matches-national-cuts.html)
How 1.2million Britons could be forced to sell their homes to pay for retirement (http://www.dailymail.co.uk/news/article-1316582/How-1-2million-Britons-forced-sell-homes-pay-retirement.html)
A trillion and rising: Britain's debt means we now pay as much in interest as we do for defence (http://www.dailymail.co.uk/news/article-1316660/UKs-1-trillion-debt-pay-defence.html)
Fox WILL accept the cuts, says Cameron as PM rebuffs Defence Secretary in budget battle (http://www.dailymail.co.uk/news/article-1316718/Liam-Fox-WILL-accept-cuts-says-Cameron-PM-rebuffs-Defence-Secretary.html)
Hospital splashes out £421k on 'modern art' - while trying to slash £40m from its budget (http://www.dailymail.co.uk/news/article-1316772/Essex-hospital-splashes-421k-modern-art-trying-slash-budget.html)
Once the system is launched, it will be much more difficult to defraud because all details will be held on one system.
Currently it is relatively easy to claim benefits while working because they are administered by different systems.
And couples can pretend they are entitled to more benefits by saying they live apart.
It has yet to be decided whether child benefit be shelved. The decision is not expected until the Treasury reveals the full details of the £83billion worth of cuts in the spending review on October 20.
Means testing for child benefit, taxation or scrapping it for older children are all being considered as alternatives.
http://i.dailymail.co.uk/i/pix/2010/10/01/article-1316724-09886B16000005DC-205_468x457.jpg Mr Duncan Smith argued that a complete reworking of the system was required to offer an incentive to work for those caught in the benefits trap. Under the current system, people can be left worse if they choose to lose their benefits and instead take a job
The plans are expected to be announced at the Conservative Party conference next week.
Mr Duncan Smith's plans were backed overwhelmingly in a public consultation on 21st-century welfare.
He argued that a complete reworking of the system was required to offer an incentive to work for those caught in the benefits trap.
Under the current system, people can be left worse if they choose to lose their benefits and instead take a job.
The plans will cover only benefits for those of working age, and will not include pensions.
Officials are still discussing how quickly the benefit should be withdrawn when someone on the dole finds work.
A withdrawal rate of between 60 and 65 per cent is being debated, according to sources.
That would mean that people will be able to keep between 60 and 65 per cent of their benefits for each extra pound that they earn once they go back to work.
Critics of the current system argue that there is presently little incentive to return to work.
Some 1.7 million people lose more than 70 per cent of their benefits for every pound earned and 130,000 lose 90 per cent.
The Institute for Fiscal Studies said the move, which comes into play in three years, 'could be one of the most important changes brought about by this Government'.
Read more: http://www.dailymail.co.uk/news/article-1316724/Bonfire-benefits-save-9bn-Duncan-Smith-wins-battle-Treasury.html#ixzz118ZXSSDc