Universal Credit changes 2022: what was said in September mini-budget, who will it affect, how will it impact?

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Chancellor Kwasi Kwarteng announced the shake-up of the welfare system in his mini-budget

More than 100,000 people in part-time work could face a benefit cut if they fail to properly look for more work, it has been announced.

The Chancellor Kwasi Kwarteng made the announcement as part of his mini-budget today (23 September).

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Universal Credit claimants currently in part-time work will be encouraged to take “active steps” to increase their earnings.

If they fail to do so, they could face having their benefits cut.

Here is all you need to know:

What has been announced?

In a shake-up of the welfare system, Mr Kwarteng announced that 120,000 Universal Credit claimants will have to take active steps to find work or lose benefits.

Billed by the Treasury as a gradual expansion, the move will be an increase from the incoming 12-hour threshold for a more intensive work search regime and is expected to take effect from January 2023 as part of the Universal Credit system.

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Mr Kwarteng has described the policy as a “win-win”, pitching it as a way to fill 1.2 million job vacancies across the country.

It is among a range of measures announced by the Chancellor in his mini-budget.

The council paid a total of £119,683 in exit packages last yearThe council paid a total of £119,683 in exit packages last year
The council paid a total of £119,683 in exit packages last year

Who will it affect and will it impact me?

Claimants working up to 15 hours a week on the National Living Wage required to meet regularly with a work coach and to take “active steps” to increase earnings.

It is described as a significant shake-up of the welfare system.

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Under the changes, claimants aged over 50 will also get extra support from work coaches, while the newly unemployed will receive nine months of targeted sessions.

The Treasury believes that rising economic inactivity among the over-50s is contributing to a shortage in the jobs market, driving up inflation and limiting growth.

A return to pre-pandemic economic activity among over-50s, according to a Government estimate, could boost GDP by up to one percentage point.

When will the changes come into force?

The shake-up of the welfare system is expected to take effect from January next year.

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What has the Chancellor said about the shake-up?

“Our jobs market is remarkably resilient, but it is not perfect. While unemployment is at its lowest rate for nearly 50 years, the high number of vacancies that still exist and inactivity in the labour market is limiting economic growth,” Mr Kwarteng said.

“We must get Britain working again. These gradual changes focus on getting people back into work and maximising the hours people take on to help grow the economy and raise living standards for all.

“It’s a win-win.

“It boosts incomes for families and helps businesses get the domestic workers they need, all while supporting economic growth.”

Work and Pensions Secretary Chloe Smith said of the plan: “Whether it’s increasing their hours in their current role, entering a new sector or switching careers, we want people of all ages and all stages to be able to progress into fulfilling careers.

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“The expertise our dedicated DWP work coaches bring will help to drive this change by removing barriers to progression and opening up opportunities for training and building skills, to increase earnings.”

How have Labour reacted?

Labour was quick to respond to the plan, with the shadow work and pensions secretary making reference to a reported Conservative plan to scrap the cap on bankers’ bonuses.

“So Tory ministers think reason we have over a million vacancies is because the low paid aren’t working hard enough and need to be threatened with sanctions but bankers needs bumper bonuses,” Jonathan Ashworth tweeted.

“We need a serious plan to support people to return to work & increase labour supply,” he said.

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