Universal credit crisis
● UNIVERSAL Credit will plunge far more working families into poverty, which will be almost impossible to work their way out of.
We supported the initial intentions of Universal Credit, to simplify benefits and improve incentives to work.
However, severe cost cutting has turned Universal Credit into a real threat to the incomes of low-paid working families.
Although we won the argument on the proposed massive cuts to tax credits, forcing a u-turn from the Government; those cuts are still being applied to Universal Credit and will hit millions of working families over the next three years.
This is a ticking time bomb that will leave many working families thousands of pounds worse-off when they are transferred onto Universal Credit.
The low work allowance and high clawback rate of 63% of net earnings are particular disincentives to work. ●
After the clawback, tax and national insurance, workers are only taking home 25% of their additional earnings.
The Government needs to look afresh at what Universal Credit means in practice for low and middle income earners and get this troubled project back on track to support not penalise working families.
The Prime Minister has talked about supporting families struggling to make ends meet. The Chancellor has the chance to make good on that commitment.
Now is the best time to make changes to improve work incentives and ease child poverty as the roll-out of Universal Credit is only just starting, so comparatively few working people are claiming it.
In a year or two when it is rolled out further, millions of working households will be reliant on this crucial support to help make their income meet the cost of living.”