Last week’s welfare reform white paper included the following graph, claiming to show that “many households will receive more under Universal Credit than under the current system”; at first viewing, the graph does appear to show small weekly gains for those in lower income deciles, and insignificant losses for those higher up the income distribution. But all is not as it seems.
Last week’s welfare reform white paper included the following graph, claiming to show that “many households will receive more under Universal Credit than under the current system”:
At first viewing, the graph does appear to show small weekly gains for those in lower income deciles, and insignificant losses for those higher up the income distribution. But all is not as it seems. Left Foot Forward has now ascertained that:
• The graph compares household income in 2014/15 after the introduction of Universal Credit with what household income would be in 2014/15 after the impacts of the welfare cuts outlined in the Chancellor’s June Budget are taken into account.
These cuts included the linking of benefits to CPI (rather than RPI); significant Housing Benefit cuts; and significant Tax Credit cuts. Some claimants will be better off under UC than they will be after the cuts, but many will be worse off under UC than under the current system before the cuts.
• The graph does not include childcare costs. These costs are significant, paying upwards of £10,000 for low-income working families with more than one child.
Given that the Spending Review cut eligible childcare payments by 10 per cent, and that the White Paper warns of further reductions in childcare costs for working families, leaving these costs out of a better-off analysis seems confusing.
• The graph includes all households in the UK, not just those who are claiming benefits or Tax Credits. While most people in the bottom deciles will be receiving benefits or Tax Credits, most people in higher deciles will not (where it is only households with children who receive significant levels of Tax Credit support).
Amalgamating all households in this way arguably distorts the graph – making the losses among middle earners seem far lower than they will be (as including households for whom there is no change – i.e. they continue to receive nothing – distorts the average).
• If the graph was based on an analysis comparing the current system with Universal Credit, if it only considered households in receipt of benefits and Tax Credits and if childcare costs were included, it would show a very different picture. Gains would be far less – and many would be shown to lose significantly.
Important questions remain unanswered about what the real impacts of Universal Credit will be, and exactly which benefits and Tax Credits are being included or excluded from its reach. A Government committed to transparency should be willing to provide more details, and to be clearer about the impacts their changes will have for households across Britain.
32 Responses to “Many will be worse off under Universal Credit”
Rachel
Many will be worse off under Universal Credit | Left Foot Forward https://www.leftfootforward.org/2010/11/impact-of-universal-credit/
Anon E Mouse
Mr.Sensible – Note what william above states. The story these figures show us is that by benefits, such as child benefit for multi millionaires and the like, cost Labour 100 seats at the last election.
Take note Mr.Sensible. You may live in a nice house in a posh area but poor people get the vote as well and if Labour wants to govern this country again it needs to reach out to everybody regardless of circumstance. It’s what Mr Blair did…
Staffordshire UNISON
RT @MsWigsy: I think we already know that: RT @leftfootfwd: Many will be worse off under Universal Credit http://bit.ly/9p8eWK
Mr. Sensible
Mr Mouse I just think that you are wrong.
Anon E Mouse
Mr.Sensible – No you don’t. You know I’m right but your dogmatic blind zombie like loyalty to a failed useless bunch of liars that were Labour means you are unable to “think outside the box”.
Before the election you were telling me how great you thought Gordon Brown was – an electoral asset practically – and what I predicted about him being booted out was correct. All I hadn’t got right was Labour’s worst election result since Michael Foot was in charge and the loss of 5 million voters in a decade.
What the left need to do Mr.Sensible is LISTEN to your leader, Ed Miliband.
He said you need renewal and he’s right. If you think your view of Labour is correct ask other Labour supporting members of this blog if they support your view on freedom of speech for example…