Credit is in danger of failing to deliver on its key objectives,
according to a new report - Will Universal Credit Work?
- published on 7 May by the Child Poverty Action
Group (CPAG) and the Trade Union Congress (TUC).
The report says:
- Although Universal Credit will improve some aspects of the
benefits system, its ability to lift families out of poverty and
remove barriers to working will be severely undermined by the
government's wider tax credit and benefit changes - with nine in
ten families gaining nothing overall from its introduction.
- Warns that the generosity of Universal Credit is often
overstated by ministers and that for those households who do gain
from its introduction many will see any benefits offset by recent
social security cuts.
Three key areas
THe study looks at Universal Credit's three main
- to reduce poverty
- make work pay
- to simplify benefits.
It raises doubts about each, especially when considered
alongside other government changes:
Only around one in ten working age households will see any
overall gain from Universal Credit, when other benefit reforms are
taken into account, says the report. Disabled claimants who work
and currently receive the disabled workers' element of the working
tax credit will see also a huge drop in their annual incomes of
Making work pay
Second earners (someone whose partner is already in work), those
who pay high childcare fees or who have mortgages, will gain very
little under Universal Credit. As a result, taking a job or
increasing their hours may not always be worthwhile
Requiring people to claim online and make joint claims with
their partners will make the process more complicated for many at a
time when advice services are also being cut.
Commenting on the report, TUC General Secretary Frances O'Grady
said: "Universal Credit is not bad in principle, but taken together
with the other benefit changes introduced by the government, it
will make most people worse off.
"And for all the claims of simplicity, in practice it is such a
complex system that the government has been forced to delay its
"We 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. This report provides a useful blueprint for
improving Universal Credit so that it can make a real difference to
Child Poverty Action Group
Child Poverty Action Group Chief Executive Alison Garnham said:
'Universal Credit seeks to address many of the shortcomings of the
current benefits system by being simpler and providing incentives
for claimants to earn more.
"But Universal Credit lets itself down on many fronts. It
introduces new complexities into the benefits system such as joint
payments and new rules on savings. In addition, the financial gains
for many are underwhelming, and the new system will rely as much on
the stick as the carrot to incentivise claimants into work.
"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."
Read the Turn2us Universal Credit information
Access the Turn2us Benefits
Awareness website (link opens in a new window)
Sources: TUC (link opens in
a new window)
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Date of publication: 7 May 2013