Universal Credit may discourage single parents from working, claims the IFS [Image: Getty Images].

The Department for Work and Pensions has welcomed a report by the Institute for Fiscal Studies, showing that more people will be worse-off under Universal Credit than the previous benefit system.

The Conservative Government has claimed that no individual would lose money as a result of its changes. But the IFS study shows:

  • Single parents have less incentive to work under UC than the old system.
  • With couples, UC encourage just one to work, rather than both.
  • And single parents under UC will keep eight per cent less of their earnings than previously.

Here are some more details:

The introduction of Universal Credit (UC) will leave working families worse off on average, the Institute for Fiscal Studies has said.

UC, which combines six benefits into one monthly payment, was intended to be more generous than the current system but the IFS said cuts to the programme meant this would not be the case.

According to the IFS research, an estimated 2.1 million families will face an average loss of £1,600 a year, while 1.8 million will gain an average of £1,500.

Its figures suggest 1.1 million homes with no-one in paid work will lose out by about £2,300 a year, while 500,000 are expected to gain £1,000. Working single parents are said to face an annual loss of £1,000.

Source: Universal Credit leaves working families worse off, IFS says – BBC News

The DWP, it seems, is delighted by this outturn:

We welcome the IFS analysis which shows that UC will make work pay and increase financial incentives for people to work more, while also bringing the welfare bill under control.”

Source: DWP being evasive over universal credit delays, MPs claim | Politics | The Guardian

In fairness, the DWP made another statement, in response to the BBC report, as follows:

“Universal Credit also includes a wide range of additional benefits – including increased childcare and more support from a dedicated work coach both things that were ignored in the IFS’s analysis.”

So it seems the Department is trying to have it both ways – both welcoming the IFS report and trashing it at the same time.

Logical conclusion? The IFS is right and the DWP is trying to hide the downside.

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