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The Progressive Policy Think Tank

​​​​​​​Changes to design of Universal Credit mean more children will end up in poverty

New IPPR modelling for Child Poverty action group shows that consecutive cuts to UC have changed the policy beyond recognition

Cuts to Universal Credit (UC) will put 1 million more children into poverty, according to new analysis by Child Poverty Action Group (CPAG) and the Institute for Public Policy Research (IPPR) published today. The research shows that the promise of greater rewards from work made to working families has been broken as a result of cuts to Universal Credit and tax credits, with affected families losing out by hundreds of pounds per year.

Carys Roberts, IPPR Research Fellow, says:

“Universal Credit has the potential to reduce child poverty and ensure work always pays. But our modelling for Child Poverty Action Group shows that consecutive cuts to UC have changed the policy beyond recognition.

“Changes to the design of UC since 2013/14 mean that 1 million more children are likely to be in poverty in 2020 than if government had retained the policy as originally legislated. Furthermore, this is in addition to the issues with implementation and waiting times that are reportedly forcing even more people into arrears and poverty.

“In this month’s Budget, the Chancellor must reinstate the original purpose of UC by reversing the cuts that have been made over the past three years.”
 

Key findings of the work include:

  • A lone parent with a 2 and a 5 year old working 16 hours a week for the national living wage and renting in average cost area would be £1,658 worse off in 2020 than if government had retained the policy as originally legislated. They would have to work an 14 extra hours a week – two whole days – just to recoup this difference, almost doubling their hours to 30 a week.
     
  • A couple with two children aged two and five, working for the National Living Wage (one full-time and one at 16 hours per week) and renting privately in an average-cost area would be £1,283 worse off a year in 2020 as a result of the cuts. They would have to work nine additional hours a week to recoup this amount.
     
  • A couple with two children aged two and five, working for the median wage (one full-time and one at 16 hours per week), and renting privately in high price area, would be £1,105 a year worse off as a result of cuts. They would have to work 7 additional hours per week to recoup the difference.
     
  • Increases in free childcare do help families relative to not having childcare support, but for lone parents and many families with a second earner working part-time the free childcare does not outweigh the losses experienced because of cuts.
     

END
 

Contact

Sofie Jenkinson, 07981023031, s.jenkinson@ippr.org

 

Notes to editors

The analysis considered the impact of 34 separate cuts and changes to the existing tax credits and benefits system and 10 to the new Universal Credit system since 2010. The impact of an additional 24 cuts and changes to the existing system was not able to be modelled for technical reasons. Each of these cuts is listed in pages 5-12. Income changes are calculated after housing costs.

The roll-out of Universal Credit for all new applicants is expected to be completed in the autumn 2018. Tax credit claims are not expected to be fully transferred to Universal Credit until 2022 at the earliest.
 

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