Universal credit will make 150,000 single parents worse off, study finds

Save the Children says welfare reforms will push many single parents and up to 250,000 children deeper into poverty

The government's welfare reforms and the introduction of the universal credit will make up to 150,000 of the country's poorest single parents up to £68 a week worse off, potentially pushing 250,000 children further into poverty, new research warns.

The aim of the universal credit is to ensure that work always pays more than benefits, but research by Save the Children suggests that for some single parents in work, the changes could have the opposite effect.

Single parents working longer hours on low pay, who are already below the poverty line, are at risk of being pushed deeper into poverty, the research suggests. A single parent with two children, working full-time on or around the minimum wage, could be as much as £2,500 a year worse off under the new system, it says.

Elsewhere, the study echoes work done by other organisations, suggesting that the universal credit will weaken the incentive for a second earner in a couple to take up work because of the less generous "earnings disregards" (the amount someone can earn before they start having their benefits withdrawn). Save the Children is calling for a more generous taper rate (the rate at which the benefit is reduced as earnings increase).

The Department for Work and Pensions disputes Save the Children's analysis, arguing that families who are already claiming benefits, will be offered transitional protection, to ensure that they do not receive less when the system is reformed. "Save the Children are wrong to assert that lone parents will lose as a result of the introduction of universal credit – the truth is 600,000 lone parents will be better off under a system which will incentivise work and make work pay," the department said in a statement.

A spokeswoman added that the new benefit aimed to ease access to childcare, by supporting childcare costs regardless of the number of hours worked.

The DWP's own impact assessments predicts that under universal credit, over 2.8 million households will have a higher entitlement to benefit, 2.7 million households will see no change, and 2 million households, including 1.1 million households with children, will have lower entitlements.

"Many low-income working families will benefit from increased incomes and better work-incentives," Save the Children's report states. "However, there are a few worrying exceptions, with some hard-working parents – especially mothers – being hit hard by the proposals."

Universal credit will begin to be rolled out in October 2013, and there is much uncertainty about whether it will have the simplifying and streamlining impact the government has promised. Over the past few months, a series of studies have questioned the impact that the government's welfare reforms will have on child poverty.

The Institute for Fiscal Studies warned last year that the shake-up of the tax and benefits system would result in a further 400,000 children falling into relative poverty during this parliament, meaning Britain would miss legally binding targets to reduce child poverty by 2020.

A study published in January by the Family and Parenting Institute said a couple with two children would be £1,250 a year worse off by 2015, with their income falling by 4.2% in the five years to 2015.

"It is going to help more people than it is going to hurt, but that's not really the point. It's not meant to hurt anyone," a Save the Children spokesman said.

"Universal credit will help some families, but mums working hard to stay above the breadline are its big blind spot," said Save the Children's CEO, Justin Forsyth. "It's incredibly hard bringing up three kids on £370 a week – losing almost a fifth of that will push many families over the edge."

Commenting on Save the Children's research, Alison Garnham, chief executive of Child Poverty Action Group, said: "This analysis confirms that universal credit is loaded against lone parents and second earners even though support to these groups was, in large part, responsible for the big child poverty reductions we witnessed in the previous decade."


Amelia Gentleman

The GuardianTramp

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