Child Poverty Action Group (CPAG) Budget Comment

Budget 2017: Rescue package for universal credit but no structural reform to keep the promise of greater rewards from work.

Commenting on today’s Budget, Chief Executive of Child Poverty Action Group Alison Garnham said:

 “We were the first to sound the alarm over the waiting days for universal credit, so we’re pleased the Chancellor has acted to remove them and put in place new arrangements for receiving advances as part of an emergency rescue package, but this should have been the budget that ushered in much needed structural reform of Universal Credit to revive the central promise to strengthen the rewards from work and that didn’t happen.  

“Our new analysis finds while effective tax rates may have improved for some families, big falls in family income caused by cuts and changes to Universal Credit have left many worse off overall, overwhelming any gains from increases in the ‘national living wage’, personal tax allowances and help for childcare. Families on universal credit who want to get better off through earnings gained little from today’s Budget. 

“What happens to universal credit will shape the future for children in low-income and just managing families.     The budgets of ordinary families will not be fit for the future until the work allowances in universal credit have been restored to support parents who want to bring home higher wages.”

ABC Note: CPAG’s new research, conducted with the Institute for Public Policy Research, models the impact of cuts to social security over the decade. It finds one million more children will be in poverty by the end of the decade as a result of cuts to universal credit .

It finds working families stand to lose £420 a year on average from cuts to Universal Credit – these are losses across the population, so the losses for UC recipients would be much higher.   And freezes and cuts to Universal Credit work allowances (the income level at which UC starts to be withdrawn) will leave lone parents worse off by, on average, £710 a year, couples £250 a year.

Restoring universal credit work allowances: this would benefit all working families by an average of £150 a year – and those on UC benefit by much more