Introduction

The editor of a recent book described the debates that the various authors had had about the title, which was Understanding social security (Millar, 2003). They had discussed the fact that there was no longer any government department with the name ‘social security’, and that tax credits had now taken over the functions of various benefits. There was perhaps an argument for abandoning the phrase altogether. However, they persevered with it because they thought that:

It is important to continue to use the phrase ‘social security’ for precisely these reasons. In this chapter, ‘social security’ is understood in a broad sense to include tax credits and some payments made by employers for social protection purposes (such as maternity pay). The chapter discusses developments in social security during 2003. (For a list of social security reforms from 1997 to 2002, see Brewer et al, 2002.) It describes major reforms under the headings of: new tax credits and the national minimum wage; children and family; pensioners; welfare to work; and housing benefit and administration; and then draws conclusions.

New tax credits and the national minimum wage

The most significant development of 2003 in social security was the introduction from April of ‘new tax credits’ – working tax credit, child tax credit and childcare tax credit. The vast majority of families with children on income support or income-based jobseeker’s allowance will not be transferred to child tax credit until 2004; but their levels of benefit were increased from April to reflect the new, higher tax credit rates.

These new tax credits are the culmination of several years’ planning. Commentators may joke about the bewildering speed of recent changes in acronyms. But the government’s rejoinder is that when it first came into office the mechanisms did not exist for its preferred system to be implemented; so it had to make interim arrangements.