Does Universal Credit Make Work Pay?

The political language of “making work pay” has barely changed since the early 1980s. Yet the realities have changed a lot. Billions poured into tax credits have helped improve returns for going out to work, as has a long-term decline in Income Support rates. Tax credits have helped make work so worthwhile that in the recent recession, there was almost no rise in the number of families without anyone in paid work, unlike in previous recessions. And Universal Credit will go further by removing any hours rules, so that even people working just a few hours a week will be better off than not working. But this help has shifted the work incentive problem. Since in-work support disappears as you earn more, many families with low wages and high childcare costs now find that they are little or no better off working five days a week than working one or two days.  Read more on the Social Policy blog.