The Joseph Rowntree Foundation is urging the government to reform Universal Credit (UC) so families with children can keep more of what they earn. The respected social policy charity is the latest organisation to urge the Westminster Government to rethink the controversial benefit.
Latest figures show that two-thirds of children living in poverty live in a working family, and analysis published by the Resolution Foundation suggests things are only going to get even tougher for low-income families with children.
The average couple with children in the bottom half of the income distribution will lose £210 next year as a result of the benefit freeze, (with a cumulative loss from the four-year freeze of £620), while the average single parent in the bottom half will lose £260 next year (with a cumulative loss of £720).
The Rowntree Foundation said: “UC should be reformed so families with children can keep more of what they earn, reducing in-work poverty. This can be done by increasing the work allowance (which operates like a personal tax allowance, letting parents keep every extra pound they earn, up to a threshold) or reducing the taper (which operates like a tax rate, withdrawing UC as earnings rise).
“JRF recommends the 2018 Budget increases the work allowances to their original level for families with children, giving a much-needed budget boost to low-income families.
“In a scenario where Universal Credit is fully rolled out in 2019/20, some 9.6 million parents and children in working families would benefit, half of whom are in working poverty. It would cost £2 billion.”
Universal Credit is a single monthly payment for people in or out of work. It replaces some of the benefits and tax credits you might be getting now:
- Housing Benefit.
- Child Tax Credit.
- Income Support.
- Working Tax Credit.
- Income-based Jobseeker’s Allowance.
- Income-related Employment and Support Allowance.
Universal Credit was designed to simplify a complicated benefits system but it’s introduction has been far from straightforward. Universal Credit has been introduced on a phased basis (Edinburgh is due to go live next month) and there have been many horror stories about it’s impact on some of society’s most vulnerable people.
Universal Credit can take up to five weeks for the first payment to reach a claimant’s account, causing immense hardship for many people who are already living on the breadline.
Back in August, the Child Poverty Action Group highlighted serious failings with the new benefit. Commenting on the findings from CPAG’s Early Warning System, the charity’s Chief Executive Alison Garnham said: “Universal Credit isn’t working for working people. Our Early Warning System shows claimants are often left flummoxed by how much – or how little – universal credit they will receive from one month to the next.
“But we believe most of the problems created by the monthly assessment system can be fixed relatively easily if the political will is there. The mass migration of families on to universal credit should not begin until these fundamental problems are resolved.”
So far, that political will has been lacking …
Esther McVey (above), the work and pensions secretary, reportedly told the cabinet last week that half of all lone parents and two-thirds of couples with children stand to lose £2,400 a year – £200 each month – once they are transferred to universal credit.
Two former Prime Ministers have stepped in to the debate. Gordon Brown predicts that the complex application process alongside Treasury spending cuts will result in a million more children being forced into poverty, with a resultant increased reliance on food banks. He warned of the possibility of ‘social unrest.’
A former Labour Prime Minister urging Tory restraint isn’t surprising, but surely alarm bells should be ringing in the Treasury when Tory grandees voice concerns too?
Sir John Major – the Tory Prime Minister who had to deal with the ramifications of the Poll Tax – warned the government that, while the theory behind the welfare reforms is ‘impeccable’, it would be wrong to rush into rolling out the new benefit without taking into account the effect UC is having on poorer families.
Referring to reports that millions of households faced losing £2,400 a year, he said: “I am saying that if you have people who have that degree of loss, that is not something that the majority of the British population would think of as fair. And if people think you have to remove yourself from fairness, then you are in deep political trouble.”
It’s understood up to forty Tory MPs have also expressed their concerns over the cuts.
Labour Shadow Chancellor John McDonnell says his party will halt the rollout of Universal Credit, and new analysis by the Labour Party has revealed that more than 70 per cent of Universal Credit sanctions have landed on claimants aged under 30.
Out of a total of 473,000 decisions to apply a sanction under the Universal Credit live service, over 334,000 (70%) have been applied to claimants aged under 30. Nearly a fifth of all sanctions have landed on claimants aged just 18 and 19 years old.
Labour is demanding the Government looks at the overwhelming evidence and stop the rollout of Universal Credit. Labour is committed to a root-and-branch review of the social security system to ensure it lifts people out of poverty and is there for all of us in our time of need.
Margaret Greenwood MP, Labour’s Shadow Work and Pensions Secretary, said: “This is further evidence of the impact of the Tories’ punitive sanctions regime. Rather than supporting young people into secure, well paid jobs, the Tories are hitting them with sanctions.
“Universal Credit is causing poverty and hardship wherever it’s rolled out, especially for young people. The Government must do the right thing and stop the rollout of Universal Credit.”
Adam Corlett, Senior Economic Analyst at the Resolution Foundation, said: “While the Prime Minister last week repeated her claim that austerity is over, significant cuts in support for millions of low-income families are set to continue next year as a result of the ongoing freeze in working age benefits.
“On Wednesday we will learn the full scale of next year’s benefit freeze, with an average lower-income family with kids on course to lose over £200 a year.
“The Budget represents a last chance to cut short the benefit freeze. Scrapping it would send a strong signal that, from the perspective of low-income families, the government is committed to ending austerity.”
So many voices calling for reform, but will the Chancellor listen? We don’t have too long to wait to find out – Philip Hammond delivers his Autumn Budget statement on Monday 29 October.
25
0
20
