The idea is one of a number of options outlined in the Department of Work and Pensions consultation paper, 21st Century Welfare, designed to revolutionise the existing benefits system.
The options include:
• combining elements of the current income-related benefits and tax credit systems
• bringing out-of-work and in-work benefits into a single ‘universal credit’
• supplementing monthly household earnings through credit payments reflecting circumstances, such as children, housing and disability.
The new system would aim to be simpler and to reduce fraud and error, as well as improving incentives to get a job, as benefits would be based on a person's earnings rather than the number of hours they worked.
The consultation paper says that the plan includes introducing ‘an integrated IT system to manage all claims, and a single payment system to apply a withdrawal rate and pay the correct entitlement. These would not be entirely new systems and could be built on our existing IT and capabilities.’
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