Ministers at the Department for Work and Pensions (DWP) have confirmed details of the new Universal Credit benefit system, which will be introduced across the country in October 2013.
They claim that 3 million of Britain's poorest families will be better off under the new system, by around £168 per month.
Universal Credit will replace a range of existing benefits including jobseeker's allowance, tax credits, income support, employment and support allowance, and housing benefit.
Secretary of state for the DWP Ian Duncan Smith said:
"The Autumn Statement confirmed Universal Credit will begin next year on time and under budget. Today, the final key elements of this reform are put in place.
"These confirm the new system will make work pay and protect the people who need it most. The clear work incentives of Universal Credit will result in up to 300,000 more people moving into work.
"We have invested to ensure people are cash protected when they move over to the new benefit so nobody will lose out."
The estimate of an additional 300,000 people gaining work is based on a belief that Universal Credit will provide financial incentives for those who want work and remove financial incentives for staying on benefits.
However, it is not clear where the jobs will come from to support this large expansion, with many more unemployed people than vacancies currently.
Universal Credit will provide some income disregards and other changes, including:
- No longer taking into account income from war pensions or armed forces compensation when calculating benefits;
- Disregarding 100% of contributions to an occupational or personal pension scheme;
- 200,000 under 25’s being able to claim in-work support for the first time;
- Kinship carers no longer being forced to look for work as a condition of their benefit;
- New rules for the self employed which will now assume a minimum level of income at the National Minimum Wage which will incentivise claimants to increase their earnings and productivity and realise their financial potential.
The assumption of a minimum level of income for self-employed people may not be welcomed by this group, with some commentators suggesting that self-employment registration is disguising unemployment for those who cannot get sufficient work.
The Department for Work and Pensions Committee of MPs raised concerns in November that Universal Credit would cause hardship for claimants.
Labour MP Dame Anne Begg, who chairs the committee, believed the government should focus on supporting the most vulnerable:
"We have serious concerns about about how more vulnerable people will cope with the changes, especially the online claims system and the proposed single monthly payment.
"The measures the government plans to put in place to help these claimants may be difficult to access and slow in identifying whose these people are, with the risk that they fall into debt and hardship before extra support can be provided."