"2 million would be better off refusing work with Universal Credit"
- 13 Dec
Department of Work and Pensions assessment claims that over two million people will be better off if they refuse extra work under the new reforms.
The government admitted "there is a risk" that working women will decide they should give up their jobs when Universal Credit is introduced.
Couples with children are likely to be among the hardest hit by the changes to the benefits system, which are being rolled out across the UK from next year, according to the Department for Work and Pensions.
The warnings result from the fact that the more people work, the more they pay in tax and national insurance, and the more they will lose in means-tested benefits under the plans.
The Prime Minister and Iain Duncan Smith, the work and pensions secretary, promised to eradicate the "trap" that means it makes more financial sense for individuals to limit the amount they work and claim higher benefits.
However, the DWP's new impact assessment for the reforms, warned this would not always be the case.
The report said:
There is a risk of decreased work incentives for second earners in couples (primarily women).
Although the number of workless households will reduce, it is possible that in some families, second earners may choose to reduce or rebalance their hours or leave work.
One of the key obstacles to work is high childcare costs, which increase as parents return to employment after the birth of children.
The DWP found that 1.8 million main earners in a family will be worse off if they take on extra hours under the reforms than they would be now. Another 300,000 secondary earners will also be penalised for taking on extra work under the scheme.
This means up to 2.1 million people would be better off refusing the offer of extra work under the Universal Credit, 600,000 more than would be better off if they agreed to take on more hours.
The DWP also concluded that couples with children "are more likely to see an increase than a decrease" in financial barriers to taking on extra work. An extra 500,000 working parents who live together with their children will lose between 60p and 80p of every extra £1 they earn under the plans.
The reforms will see a range of working-age benefits and entitlements, such as Jobseeker's Allowance, Income Support and Housing Benefit, paid as a single Universal Credit to simplify the welfare system.
Chris Goulden, head of poverty at the Joseph Rowntree Foundation, said:
The centrepiece of Universal Credit is to make work pay, but these figures show it could hit the strivers it is supposed to help.
It is self-defeating to encourage more people into part-time work, only for them to see their earnings wiped out when they progress into full-time jobs.
If Universal Credit is to be successful in helping people out of poverty, it needs to ensure work is truly worthwhile and does not punish people who do the right thing try boost their hours and income.
Labour's shadow work and pensions secretary, Liam Byrne, said:
David Cameron promised to make work pay, but Britain's strivers are set to take a hammering because the Chancellor is raiding Universal Credit to cover the cost of his own economic failure.
This government's flagship scheme is now set to leave more than two million with less reason to work harder than they have now.
A DWP spokesman said:
Universal Credit will provide very clear incentives for claimants to move into work - it's a far simpler system that will ensure people are better off in work than on benefits.
Over 1 million households moving into work will keep more of their pay under Universal Credit and more than 3 million households will be better off.
Source: The Telegraph
- 03 May
MANY MAY STRUGGLE AS A RESULT OF CHANGES TO THE UNIVERSAL CREDIT SYSTEM
The study envisages the following issues from the move which is expected to save the taxman £1billion a year by 2021:Chief executive of Child Poverty Action Group, Alison Garnham said:"This cut...
- 13 Mar
CIH SCOTLAND POINTS OUT ISSUES WITH IMPLEMENTATION OF THE NEW SINGLE PAYMENT ON UNIVERSAL CREDIT
Following recent warnings from the Scottish Parliament's Social Security Committee about problems with the new Universal Credit system, CIH Scotland has pointed out some issues with the...
- 23 Nov
THE LHA CAP WILL APPLY TO ALL TENANTS THAT RECEIVE UNIVERSAL CREDIT
These details were stated by the government:Lord Freud announced in a ministerial statement that this would "ensure simplicity and a streamlined process". He also said tenants who are moved from...
- 17 Oct
UNIVERSAL CREDIT SET TO EXPAND IN AREAS SERVED BY KIRKINTILLOCH JOBCENTRE
The beneficiaries of this would have to live within one of these postcodes: G64 4, G66 1, G66 2, G66 3, G66 4, G66 5, G66 7 and G66 8.This entitlement means working age people in these postcodes...
- 25 Aug
AFTERMATH OF UNIVERSAL CREDIT DELAYS
The labour MP also said "the minimum six-week payment period faced by new Universal Credit claimants led to reliance on emergency food parcels, triggered debt and rent arrears, and caused health...
- 25 May
FIRST ERROR AND FRAUD FINDINGS FOR UNIVERSAL CREDIT
The department's findings show that underpayments due to official errors were considerably higher than for the older Job Seekers Allowance (JSA) Programme, however, the rate of overpayments was...
- 09 Sep
Universal credit targets defended by Iain Duncan Smith
When asked about the effectiveness of the roll-out of universal credit Mr Duncan Smith said: “Universal credit is now available in more than half of jobcentres across Great Britain and will be...
- 18 Aug
Scottish carers are worse off due to universal credit
Child Poverty Action Group has sent a report to Scottish and UK ministers urging them to amend the universal credit regime to pay closer heed to Scotland’s systems and use devolved power to protect...
- 13 Aug
Universal Credit claimants rise to almost 90,000
Figures by the Department for Work and Pensions have found that 89,357 people were claiming universal credit by 9th July which was a rise of 18% compared to 75,426 on 11th June, reports Inside...
- 13 Aug
Scottish government to revamp universal credit
The Scottish Government has decided it wants to give claimants the choice of having their payments made twice a month rather than just once a month on universal credit, reports Scottish Housing...
Responding to the DWP Consultation: Housing Benefit Reform - Supported Housing "Sincere thanks to Michael Patterson for an excellent presentation on the HB Reform issues in Leeds last week, and for all the very helpful info and links. I do intend to respond on behalf of our organisation, Caring For Life, but feel that Support Solutions' response is excellent." E.S. - Caring for Life