Universal Credit Is “Less Generous” Than Tax Credits

For the first time, an authoritative statutory body has recognised that the cuts to Universal Credit announced in last summer’s Budget will mean that it is much less generous than was originally planned, making it effectively a cut when compared with Working Tax Credit and Child Tax Credit which it replaces. Since it was first announced, just about every change announced has made UC meaner. Last summer’s Budget was the worst of all, Mr Osborne announced cuts to spending of £4,887 million:

·         Very substantial reductions in the work allowances (the amount that can be earned before UC is ‘tapered’ away);

·         Limiting the child element to two children for new claims and births; and

·         Removing the first child premium for new claims.

Read more on the Touchstone blog.

Universal Credit Postcode Lottery Will Make Some Families £3,000 Worse Off Than Others

Iain Duncan Smith has been accused of ushering in a new postcode lottery by pushing ahead with cuts to Universal Credit, which will see some benefit recipients up to £3,000 worse off next year than other claimants in exactly the same circumstances. George Osborne announced he had abandoned plans to impose £4.4bn of cuts to working tax credits from next April but these cuts will take effect for thousands of families on Universal Credit next year. This means that a single mother of two working full-time on the minimum wage and claiming Universal Credit will have a net income that is £2,981 lower next year than someone in the same circumstances who is claiming tax credits.  Read more on the Independent website.

Universal Credit: The Benefit Cut for Workers That Has ‘Escaped Notice’

A Labour MP has hit out at plans to dock the benefits of workers under Universal Credit which he says has almost “escaped notice”.  Michael Meacher, Labour MP for Oldham West and Royton, was citing research by the Resolution Foundation which estimates that nearly 1.2 million working adults will face losing some of their benefits under Universal Credit if they do not comply with new requirements to work longer hours, find an additional job or seek higher wages.  Under UC, the criteria of 16 and 24 hours per/week for working tax credit eligibility will be scrapped and claimants will gain entitlement to an appropriate amount of in-work support for working any number of hours.  Under the new system any claimant of working benefits is required to meet an earnings threshold equal to national minimum pay rates for a 35-hour week, to be earned if necessary through such combined measures as working longer hours, getting their employer to increase their hourly wage or getting an additional job on top of what they were already working.  Download a copy of the report from the Research Foundation’s website.

Employers Can’t Offer the Hours Parents Need

Working Families (WF) is concerned about the changes to Working Tax Credit (WTC) from April 2012 which mean that couples currently working 16 hours must increase those hours to 24 (with one parent working at least 16 hours) in order to continue to receive WTC.   WF carried out a survey of employers representing around a quarter of a million employees, to find out their likely responses when their employees ask for more hours of work. Among the findings were;

• 67% of employers who responded are unaware of the changes to WTC rules

• 17 per cent are confident of accommodating a request for eight more hours of work. A further 33 per cent said they may be able to offer some hours, but not eight, while 17 per cent said it was “unlikely” or “impossible” to accommodate a request.

• When asked about the impact on business if an employee left because they couldn’t get more hours of work, only 17 per cent said “business would suffer”. Fifty six per cent thought it would be a “minor inconvenience” and 17 per cent were confident that they could easily recruit a replacement.

• Only half of employers would create jobs of less than 16 hours a week if they thought there was demand for them from parents.

Read more on the Working Families website.