POLITICS

Universal Tax Credit Will Not Benefit Most Families Says TUC/Child Poverty Action Group Report

07/05/2013 06:47 BST | Updated 07/05/2013 08:47 BST
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File photo dated 13/03/13 of Frances O'Grady the General Secretary of the TUC who has has written to the UK Statistics Authority, calling on it to investigate statements by Work and Pensions Secretary Iain Duncan Smith.

Most families will gain nothing from the government's new Universal Credit , with ministers overstating the generosity of the benefit, a new report claimed on Monday.

The TUC and Child Poverty Action Group said the new single benefit payment, now being trialled in parts of the country before being introduced across the UK, was in danger of failing to deliver on its key objectives.

The two groups said that although Universal Credit will improve some aspects of the benefits system, its ability to lift families out of poverty and remove barriers to working will be "severely undermined" by the government's wider tax credit and benefit changes.

Nine out of 10 families will gain nothing overall from its introduction, with any benefits offset by recent social security cuts, it was claimed.

Requiring people to claim online and make joint claims with their partners will make the process more complicated at a time when advice services are being cut, said the report.

TUC General Secretary Frances O'Grady said: "Universal Credit is not bad in principle, but taken together with the other benefit changes introduced by the government, it will make most people worse off.

"For all the claims of simplicity, in practice it is such a complex system that the government has been forced to delay its roll-out.

"We are also concerned at the impact Universal Credit will have on disabled workers, as well as its plans to take away benefits from second earners as soon as they find work.

"Ministers must not turn a blind eye to these problems or Universal Credit will fail to help those very people it has been designed to support. This report provides a useful blueprint for improving Universal Credit so that it can make a real difference to families."

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Child Poverty Action Group chief executive Alison Garnham said: "Universal Credit seeks to address many of the shortcomings of the current benefits system by being simpler and providing incentives for claimants to earn more.

"But Universal Credit lets itself down on many fronts. It introduces new complexities into the benefits system such as joint payments and new rules on savings. In addition, the financial gains for many are underwhelming, and the new system will rely as much on the stick as the carrot to incentivise claimants into work.

"Universal Credit is also blind to conditions outside of the benefits system: a lack of suitable jobs, the high costs of housing, and expensive childcare to name a few. Taken in isolation, Universal Credit may increase some households' incomes, but what financial gains they receive are more than wiped out as a result of the government's broader programme of cuts.

"Many of Universal Credit's shortcomings can be fixed but if the government wants to reduce poverty, it needs to take a long, hard look at its broader policies rather than expect Universal Credit to save the day."

Citizens Advice chief executive Gillian Guy commented: "We support a simplified benefits system which makes it clear that work pays and provides an essential safety net but the success of Universal Credit will be in its implementation. We are keeping a watchful eye to make sure it truly delivers on its promises and will sound the alarm bell if CABs across the country identify problems.

"Such a radical overhaul of the benefit system will not be without teething problems and we have concerns that weekly to monthly payments, direct housing benefit payments and making payments to households rather than individuals will be a significant and in some cases unmanageable shift for families on tight budgets."

A Department for Work and Pensions spokesman said: "Our welfare reforms will improve the lives of some of the poorest families in our communities, with Universal Credit simplifying the complex myriad of benefits and making more than three million households better off.

"The benefits system this government inherited was broken, trapping the very people it was designed to help into cycles of worklessness and welfare dependency. The simpler Universal Credit will make it easier for people to move off benefits and into work and will ensure work always pays."