Universal Credit

With the roll-out of the full Universal Credit service finally starting Wednesday 25th May – it is being rolled out to five jobcentres including Bath and Newcastle Cathedral Square, with more to follow in the coming months and years – the Resolution Foundation is calling on the government to make a number of reforms to ensure the success of the policy.

By 2020 Universal Credit will be the second largest component of welfare spending – amounting to £53 billion a year – and almost half of all families with children will be entitled to it at any given point.

Analysis by the Resolution Foundation, which considers the impact of UC alongside the new National Living Wage and increases in the Personal Tax Allowance, found that around 2.5 million working households will be worse off by an average of £41 a week, while around 2 million households will be better off by an average of £34 a week.

It also finds that recent cuts to work allowances in UC had particularly reduced work incentives for single parents and second earners in couples, both of whom are particularly sensitive to financial incentives to work.

David Finch, Senior Economic Analyst at the Resolution Foundation, said: “After years of delay, the full Universal Credit service will finally become a reality as it is rolled out across selected Jobcentres from today.

“Universal Credit is in many ways an improvement on the current system, and some families will be better off. But it also has serious design flaws that need to be addressed before it has been fully implemented.

“The weakened rewards for entering work and earning more are particularly worrying, especially for single parents and second earners who are normally sensitive to such incentives.

“Improving these work incentives will help Universal Credit to boost employment, tackle low pay and make the government’s welfare reform more female-friendly.”