31.10.17
Experts call for reform of ‘not fit for purpose’ Universal Credit
Universal credit needs to be relaunched if it is to be successful in the future, a review published today by a leading think tank has argued.
The review, by Resolution Foundation, claims that the system is currently at risk of failing those most in need, as it negatively effects the most disadvantaged in society.
It expresses concerns at the current six week wait experienced for those making new Universal Credit claims, given that only one in seven working age families who claim the benefit have more than one month’s income in savings.
Cuts to Universal Credit means that it will be almost £3bn a year less generous than the tax credit system it replaces.
Consequently, working families will be an average of £625 a year worse off, with 1.1 million two parent working families set to lose an average of £2,770 a year.
Working single parents are expected to lose £1,350 a year on average. As a result of these cuts, the work incentives which the new system was supposed to create have actually been weakened, with lone parents able to work fewer hours before losing any of their benefits.
The foundation says that over two thirds of potential second earners with children will keep a maximum of 40% of their gross pay if they enter low paid part-time work, removing the incentive to work longer hours.
It has set out a potential reform of the Universal Credit system, which includes reducing the six week waiting period and encouraging payments on a more flexible schedule than monthly, which does not work for many people, and tackling the design flaws, as well as improving the incentives to work.
Senior policy analyst at the Resolution Foundation, David Finch, said: “The government is rightly committed to the roll-out of Universal Credit, but will need to relaunch the benefit to both address the design challenges that are already visible and get ahead of those that will emerge in the years ahead.”
He continued: “Looking further ahead there are major challenges to come, from how childcare is dealt with to ensuring equal treatment of the self-employed.
“The upcoming Budget provides an opportunity to relaunch Universal Credit – making it fit for purpose in 21st Century Britain.”