Universal Credit ‘may hit finances of low-paid workers’

UNIVERSAL CREDIT could leave low-paid workers’ financial security hanging in the balance, with the self-employed potentially hundreds of pounds a year worse off, according to new research.

Major new reports by the Citizens Advice charity found that self-employed workers on Universal Credit could receive far less than employees earning the same amount.

The charity has also called for a rethink over cuts to the work allowance element of the benefit, given the risk of financial insecurity for Universal Credit claimants.

Gillian Guy, chief executive of Citizens Advice, said: “Despite the labour market changing significantly in the last decade, including a rapid rise in self-employment, Universal Credit is still better suited to those with regular jobs.

“The Government has shown it is prepared to act to improve Universal Credit as new facts come to light - an approach we strongly support.

“It now needs to look again at the design of the benefit to ensure self-employed and agency workers aren’t left at a financial disadvantage.”

The first of two reports by the charity highlights issues with the minimum income floor, a rule that assumes everyone claiming Universal Credit who has been self-employed for a year or more is earning the national minimum wage (NMW).

If they earn less than the NMW one month, their Universal Credit payment will not make up the difference.

However, if their monthly earnings go over the NMW, their benefit payment will be reduced accordingly.