On 16 February 2011 the Welfare Reform Bill was introduced to Parliament. The Bill details the biggest change to the welfare system for over 60 years and is due to start taking place in stages from January 2012 and ending April 2016.

The aim is to make the benefits and tax credits systems fairer and simpler by:

Creating the right incentives to get more people into work by ensuring work always pays

Protecting the most vulnerable in our society

Delivering fairness to those claiming benefit and to the taxpayer.

The main elements of the Bill are:

The introduction of Universal Credit to provide a single streamlined benefit that will ensure work always pays.

A stronger approach to reducing fraud and error with tougher penalties for the most serious offences.

A new claimant commitment showing clearly what is expected of claimants while giving protection to those with the greatest needs

Reforms to Disability Living Allowance, through the introduction of the Personal Independence Payment to meet the needs of disabled people today

Creating a fairer approach to Housing Benefit by capping the total amount of benefit that can be claimed.

Driving out abuse of the Social Fund system by giving greater power to local authorities

Reforming Employment and Support Allowance to make the benefit fairer and to ensure that help goes to those with the greatest need

Changes to support a new system of child support which puts the interest of the child first.

Localisation of Council Tax.

Universal Credit

Around 2.8 million low to middle income households will be better-off on UC. 

The average overall gain will be £29.00 per week under UC.

UC will lift around 900,000 individuals out of poverty, including more than 350,000 children and around 550,000 working-age adults.

Government will invest an additional £300 million into childcare support under UC on top of the £2bn already spent under the current system. 

Removing the hours rule will mean that around 80,000 more families with children will benefit from childcare support for the first time. 

By October 2017; approximately 12 to 13 million tax credit and benefit claims will be transformed into eight million UC payments.

Benefit Cap

The benefit cap of £26,000 will mean that no family on benefits will earn more than the average salary of a working family (£35,000p.a. before tax).

40,000 to 67,000 households will be affected by the cap.

The benefit cap will provide savings of £290m in 2013/14 and £330m in 2014/15 (cash terms) or £275m in 2013/14 and £305m in 2014/15 (at 2011/12 prices).

Housing Benefit

Housing Benefit will be set at a maximum of £400 a week. This will stop families on benefits living in houses that hard working families could never afford.

Housing Benefit costs over £21bn in 2010/11 [or nearly £23bn this year] and, without reform, would increase to £26bn by 2014/15 (cash terms). The Housing Benefit reforms that we announced in the Emergency Budget and Spending Review will result in annual savings of over £2bn by 2014/15.

Social Sector Size Criteria will stop the practice of the state paying for rooms that are not being used. This will help tackle the social housing shortage that blights many lives in our towns and cities. 5 million people in England alone are waiting for social housing. In London 70,000 households are getting Housing Benefit for extra bedrooms they do not need - costing the tax payer £80million a year.