2 million better off refusing work under Universal Credit

Fri, 14/12/2012 - 17:38 -- nick

More than 2 million people will be better off refusing work under Universal Credit.

Despite the government's promise that work will always pay under the new system, working women may lose out in large numbers.

Couples with children are likely to be hit hard; the more people work, the more they pay in tax and national insurance, and the more they will lose in means-tested benefits under the plans.

Universal Credit, which will be implemented nationwide from October 2013, was promoted by Prime Minister David Cameron as a way to ensure “it always pays to work.

“Never again will work be the wrong financial choice,” he said. “The more you work, the better off you will be.”

However, the DWP’s recently-released impact assessment for Universal Credit warned this would not always be the case.

“There is a risk of decreased work incentives for second earners in couples (primarily women),” the report said.

“Although the number of workless households will reduce, it is possible that in some families, second earners may choose to reduce or rebalance their hours or leave work.”

Chris Goulden, head of poverty at the Joseph Rowntree Foundation, said: “The centrepiece of Universal Credit is to make work pay, but these figures show it could hit the strivers it is supposed to help.

"It is self-defeating to encourage more people into part-time work, only for them to see their earnings wiped out when they progress into full-time jobs.

“If Universal Credit is to be successful in helping people out of poverty, it needs to ensure work is truly worthwhile and does not punish people who do the right thing try boost their hours and income.”

Labour’s shadow work and pensions secretary, Liam Byrne, said: “David Cameron promised to make work pay, but Britain’s strivers are set to take a hammering because the Chancellor is raiding Universal Credit to cover the cost of his own economic failure.

“This government’s flagship scheme is now set to leave more than two million with less reason to work harder than they have now.”

A DWP spokesman said: "Universal Credit will provide very clear incentives for claimants to move into work - it's a far simpler system that will ensure people are better off in work than on benefits.

"Over 1 million households moving into work will keep more of their pay under Universal Credit and more than 3 million households will be better off."

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