Almost two million people moved to the Government’s flagship Universal Credit programme are set to see their annual earnings cut by more than £1,000 a year.
Around 11 million UK adults will eventually find themselves in receipt of Universal Credit payments, with around 4.2 million of these better off under the new system by between £100 and £1000 a year.
However, many more will find themselves significantly worse off.
A staggering 1.9 million people are set to lose more than £1,000 a year compared to previous benefits, with disabled people among the hardest hit.
Universal Credit is replacing a number of exisiting social security benefits with one single monthly payment, but has been beset with delays and growing concerns that the new benefit is pushing vulnerable people into poverty and unmanageable debt.
Three-quarters on the worst affected groups include those with financial assets greater than £6,000, the self-employed reporting low levels of earnings, couples where one member is above state pension age and the other below, and some former claimants of disability benefits.
Meanwhile, people in working-rented households on means-tested benefits look set to benefit from the controversial welfare reform – 29% see an increase in entitlement of at least £1,000 per year.
The Institute For Fiscal Studies (IFS) says the effect of Universal Credit on people with disabilities is particularly significant and complex, with some seeing large gains while many others will see significant losses.
According to the IFS, the overall impact of Universal Credit is that in any one year about one in three adults entitled to means-tested benefits see a change in entitlement of at least £1,000 per year – 1.6 million gaining, 1.9 losing out.
However, the financial watchdog says many of the biggest losses are temporary, although Universal Credit will continue to hit the poor worse when compared to wealthier households.
Those whose average incomes over eight years are in the lowest tenth of the population – the very poorest – lose, on average, 1.1% of their income over the eight years (equivalent to £100 per year) from Universal Credit.
Tom Waters, Research Economist at the IFS and an author of the briefing note, said: “Universal Credit changes benefit entitlements for three-quarters of those entitled to means-tested benefits, and 30% see a change of at least £1,000 per year.
“The biggest losses experienced as a result of the switch are mostly down to a small number of specific choices the government has made about Universal Credit’s design, such as its treatment of the low-income self-employed and people with financial assets.
“Many of those very large losses do turn out to be temporary for those concerned.
“However, even when measuring people’s incomes over relatively long periods, Universal Credit still hits the persistently poor the hardest on average.”
A DWP spokeswoman said: “This report wrongly assumes that everyone was claiming their full benefit entitlement under the old system, which they weren’t because the system was overly complex.
“With recent work allowances changes, 2.4 million households will be up to £630 per year better off and people will access around £2.4 billion of previously unclaimed benefits.
“Universal Credit supports people into work and helps them increase their earnings while providing a vital safety net for those who need it, while the old system trapped people on benefits or taxed them punitively for taking on more hours.
“We continue to make improvements and have invested £10 billion into Universal Credit since 2016.”
Last updated at 22:48 (GMT) on 24 April 2019 to include a comment from the DWP.