A groundbreaking proposal from one of Britain's leading think tanks could signal the most significant overhaul of the welfare system in a generation. The Resolution Foundation has put forward a bold plan to radically reform Universal Credit, arguing the current system is failing to provide adequate support for those who need it most.
The £22 Billion Lifeline
The centre-piece of the proposal is a massive £22 billion investment into the Universal Credit framework. This substantial funding boost aims to address what the Foundation identifies as critical flaws in the current system, particularly its inability to provide a proper safety net during periods of economic hardship and soaring living costs.
Simplifying the System
The complex and often brutal five-week wait for initial payments would be eliminated under the new plan. The Foundation proposes replacing this stressful period with a more humane two-week assessment phase, followed by immediate financial support. This change alone could prevent thousands of families from falling into debt and relying on food banks while waiting for their claims to be processed.
Boosting Payments for Working Families
Perhaps the most significant change involves the work allowance—the amount claimants can earn before their benefits begin to be reduced. The report recommends doubling the current work allowance, a move that would put an estimated £1,000 more per year into the pockets of low-income working families. This creates a stronger incentive for employment while ensuring work genuinely pays.
Strengthening the Safety Net
The reforms would substantially increase the basic level of support for those unable to work due to disability, illness, or care responsibilities. The Foundation argues that the current rates are simply insufficient to live on, pushing many into severe poverty and debt.
A System Fit for Purpose
Alex Clegg, Senior Economist at the Resolution Foundation, stated: "Our current social security system is not delivering on its most basic purpose—providing adequate support to those who need it. These reforms would create a simpler, fairer system that actually protects people from poverty rather than exacerbating it."
The proposal comes amid growing pressure on the government to address the cost-of-living crisis that continues to squeeze household budgets across the nation. With food and energy prices remaining stubbornly high, many families relying on Universal Credit are facing impossible choices between heating their homes and putting food on the table.
While the £22 billion price tag is substantial, the Resolution Foundation argues that the long-term benefits—including reduced poverty, improved mental health outcomes, and increased economic productivity—would represent a wise investment in the nation's social and economic future.
The report is expected to fuel the debate on welfare reform as political parties prepare their manifestos for the next general election, making the future of Universal Credit a potential key battleground issue.
