400,000 families ‘worse off under universal credit’

Not all low-earning working households will be better off under the new universal credit system, according to a report from the Chartered Institute of Housing. It calculates that 400,000 working families will have less income under universal credit in 2015 than they did in 2010.

Key points

  • The new universal credit will deliver improvements on the existing system, and for some groups will mean real gains. But for others it will mean they are actually worse off.
  • Lone parents with one, two or three children will be worse off across the whole income range.
  • Most two-child families with a single earner (either a lone parent or in a couple) who earn less than the 'living wage' will be worse off.
  • Couples with three children will be also worse off if their earned income is less than £300 a week.
  • Overall, 400,000 working families will have less income under universal credit in 2015 than they did in 2010, under the 'pre-reform' system.

The report identifies a number of 'easy steps' the government could take to fix these problems, including boosting the earned income 'disregards' and uprating universal credit allowances in line with inflation. It also recommends wider changes such as keeping rents low for social housing tenants, boosting council tax support for those on low earnings, and putting extra resources into affordable childcare.

SourceMaking Work Pay: Universal Credit & Low Income Working Households, Chartered Institute of Housing
LinksReport | CIH press release

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