Universal Credit will make "most people worse off"
- 08 May
A new report shows that the effects of universal credit following other benefit changes is unlikely to benefit most households.
Those worst affected are likely to be families, in particular those in poverty, and disabled workers.
The report published by Child Poverty Action Group (CPAG) and the TUC says that the new system will be severely undermined by the recent tax credit and benefit changes.
It states that although Universal Credit will improve some aspects of the benefits system, it is unlikely to lift families out of poverty or help remove barriers to working.
Even though these are part of the wider intentions of universal credit, they have been set back by the other changes that the government have made to benefits and tax credits.
'Universal Credit - Will It Work?' warns that the positive outcomes of the scheme has been overstated by ministers, and the main objectives are not likely to be achieved.
It is unlikely to reduce poverty, which is one of the main aims, as nine in ten families will gain nothing from its introduction, and the report calculates that any gains made are likely to be offset by the other changes.
Analysis by economist Howard Reed shows around 50% of households will see their income fall (compared to what they would have received under the benefit and tax credit system the government inherited).
On average, the second poorest group of households (those with incomes of £10,187) will lose over £500 by 2015 as a result of all the benefit changes including Universal Credit. And those in the fourth income group (with household incomes of around £16,010) will find themselves an average of £700 out of pocket (compared to the previous system).
It is also unlikely to simplify benefits, as intended, because they are enforcing a huge change to the system, in particular with making it online when a number of the people claiming benefits do not have access to or knowledge, the internet. This will complicate matters, and there is also less help available as advice services are less available due to funding cuts.
The report makes a number of recommendations, including increasing support for childcare from 70 to at least 80% of the actual costs, thereby going some way towards reducing the barriers to employment for parents, and recognising the real costs of disability by ensuring that levels of support for adults and children with disabilities are not lower than those provided under the current system.
They have also suggested making a structured exceptions policy that is informed by evidence to ensure that the needs of those who cannot manage online applications, joint claims, monthly payments or direct payments are accommodated, and that independent systems are put in place to monitor and review decisions to sanction.
TUC General Secretary Frances O'Grady said:
For all the claims of simplicity, in practice it is such a complex system that the government has been forced to delay its roll-out.
We are also concerned at the impact Universal Credit will have on disabled workers, as well as its plans to take away benefits from second earners as soon as they find work.
Ministers must not turn a blind eye to these problems or Universal Credit will fail to help those very people it has been designed to support.
Child Poverty Action Group chief executive Alison Garnham said:
Universal Credit is also blind to conditions outside of the benefits system: a lack of suitable jobs, the high costs of housing, and expensive childcare to name a few.
Taken in isolation, Universal Credit may increase some households' incomes, but what financial gains they receive are more than wiped out as a result of the government's broader programme of cuts.
Many of Universal Credit's shortcomings can be fixed but if the government wants to reduce poverty, it needs to take a long, hard look at its broader policies rather than expect Universal Credit to save the day.
A Department for Work and Pensions spokesman said:
Our welfare reforms will improve the lives of some of the poorest families in our communities, with Universal Credit simplifying the complex myriad of benefits and making more than three million households better off.
The benefits system this government inherited was broken, trapping the very people it was designed to help into cycles of worklessness and welfare dependency.
The simpler Universal Credit will make it easier for people to move off benefits and into work and will ensure work always pays.
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Responding to the DWP Consultation: Housing Benefit Reform - Supported Housing "It was well-run, in a good location, and very useful. I've only one suggestion; as the session went on it would perhaps have been useful for bullet points of general agreement about what should be in the sector response to be displayed and added to as the session went on, maybe on a flip chart. Regarding your response paper, I particularly like the answer you give to question 9. In fact the general: "if it ain't broke don't fix it" response could be pushed harder." M.P. - Adref Ltd