Low-income working families on Universal Credit set to lose £1,300

Resolution_FoundationWorking households on Universal Credit are set to lose an average of £1,000 in 2020, rising to £1,300 for those with children, despite the welcome reversal of the main cuts to tax credits announced in the Spending Review.

New analysis by the independent think-tank the Resolution Foundation has noted that these losses will be higher still if the cuts that only affect new welfare claims are added. In those cases losses will be particularly high for large families, with some low earning couples with three children losing £3,000.

The distributional analysis of tax, benefit and minimum wage changes announced in the Summer Budget and Autumn Statement shows that the average loss among households in the bottom half of the income distribution is £650, while there is no average loss in the top half of the distribution.

Torsten Bell, director of the Resolution Foundation, said: “The focus in recent months and on the day of the Autumn Statement was rightly on the immediate impact on family budgets of tax credit changes next April. That reinforces how welcome the Chancellor’s decision to reverse those changes is. It will have reassured millions of working families that were set to be significantly worse off next April.

“The attention now turns to the longer term changes to the welfare system the Government has put in train. All the post-2020 welfare cuts announced in the Summer Budget remain in place and will eventually affect millions of families as Universal Credit is rolled out nationally.

“New Resolution Foundation analysis shows that these cuts fall overwhelmingly on poor working families.

“The most damaging changes are to Universal Credit, the Government’s flagship welfare programme which is at serious risk of being undermined. For working households with children on Universal Credit the average loss with be £1,300 in 2020. These changes will also increase the risk of people being trapped in low-paid short-hours work.”


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