Labour signalled an embarrassing climbdown over welfare reform yesterday, as the biggest ever shake-up in the benefits system got under way.
In a surprise move, shadow work and pensions secretary Liam Byrne indicated his party now backed the introduction of the new universal credit system, designed to ensure it always pays for people on benefits to go back to work or accept extra hours.
Labour voted against the scheme when it was debated by Parliament last year. But yesterday Mr Byrne said the universal credit system was a ‘fine idea’, albeit one with some details still to be ironed out.
Shadow employment minister Stephen Timms also said the scheme was a ‘sensible’ idea which would ‘potentially simplify’ the benefits system. The climbdown came as the huge change was launched yesterday with a modest pilot scheme in Ashton-under-Lyne, Greater Manchester.
Fresh claimants will be required to sign up to the new system, which will see them receive a single benefit payment linked to their income.
Ministers believe the system will make it much easier for people to see that they would be better off in employment. Work and Pensions Secretary Iain Duncan Smith hailed the new system as ‘nothing less than the start of a fundamental cultural shift of the welfare system’.
He dismissed Labour claims that the system was suffering from delays, insisting it would be rolled out in full by 2017 as planned. But the tiny scale of the pilot scheme suggests ministers have been warned the system is likely to suffer numerous teething problems before it is extended to handle millions of benefits claims.
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Universal credit will replace a string of working age benefits – including jobseekers’ allowance, working tax credits and housing benefit – into a single monthly payment.
Ministers had once suggested that as many as a million claimants could be on the new system in the first 12 months. But the pilot scheme, which will run for six months, is expected to handle about 7,000 claims.
The Universal Credit is being rolled out to Jobcentres from today (file picture)
The new scheme has been dogged by persistent reports of problems with the complex IT system needed to ensure millions of benefit recipients receive the right amount of money.
Mr Duncan Smith also rejected criticism that the system, which has to be accessed online, would be too difficult for some benefit claimants.
He said extra help would be given to the 20 per cent of benefit claimants who do not use the internet, adding that computer skills were essential for anyone looking for a job. ‘Ninety-six per cent of all jobs now require some kind of computer interface, so that means if you cannot go onto a computer you will only be able to apply for 4 per cent of the jobs in Britain.
Labour said the new system was causing ‘confusion and delay’. Mr Timms insisted the party had always supported the basic principle, despite voting against it.