The Labour Party has today called on the UK Government to halt the roll-out of its flagship Universal Credit (UC) system, as analysis shows that single parents with dependent children could be left up to £3,100 a year worse off when compared to tax credits.
Labour analysis of data from the House of Commons Library found that incomes are falling for both private and public sector workers as real wages stagnate and in-work benefit support is cut.
Labour has warned that cuts to both tax credits and UC, which is replacing Tax Credits and a number of existing social security benefits with one single monthly payment, “are having a dramatic effect on people’s lives”.
Separate equality data obtained by Labour also shows that UC disproportionately affects women and ethnic minorities.
Shadow Work and Pensions Secretary Debbie Abrahams said: “It is shocking that most people on low and middle incomes are no better off than they were five years ago, and in some cases they are worse off.
“The Government’s cuts to in-work support of both tax credits and Universal Credit are having a dramatic effect on people’s lives, on top of stagnating wages and rising prices.
“It’s no wonder we are seeing record levels of in-work poverty, now standing at a shocking 7.4 million people.
“These analyses make clear that the Government’s abject failure on living standards will get dramatically worse if universal credit is rolled out in its current form.”
In June of this year a joint report from housing groups warned UC is causing “considerable hardship” for council housing tenants.
The report from the National Federation of ALMOs (NFA) and the Association of Retained Council Housing (ARCH) called on the UK Government to halt to the roll-out of UC and remove the 7-day-wait period for new claims.
Commenting on the report, NFA Managing Director Eamon McGoldrick said: “We are strongly urging Government/DWP to halt the roll out of UC and ‘Pause for thought’ – until the system works properly for both claimants and landlords.
“Our members are supportive of the principles of UC and are willing to work with the DWP to find solutions to the problems identified within our survey.
“In the meantime we are calling on government to restrain its ambition to accelerate roll out UC over the course of 2017/18 and remove the 7 day wait period.”
John Bibby, Chief Executive of ARCH added: “If the level of intensive support needed to [help] vulnerable tenants is to be sustained during the planned rollout additional resources are essential.
“Councils and ALMOs are therefore calling on Government to create a Transition Funding Pot to enable councils and landlords to effectively manage the rollout of UC and adequately support vulnerable tenants.
“Without this, increasing numbers of vulnerable households will drop through the net.”
However, a spokesperson for the Department for Work and Pensions defended UC: “We are committed to helping people improve their lives and raise their incomes”, they said.
“Universal Credit does that by providing additional, tailored support not available under the old benefit system, including more help for those in work so they can eventually stop claiming benefits altogether, and under UC people are moving into work faster and staying in work longer than under the previous system.
“Earlier this year we made the rate at which Universal Credit is withdrawn more generous so people keep more of what they earn as they move into work, which is set to help around 3million families across the country.
“We are also raising people’s take home pay by introducing the National Living Wage worth £1400 extra a year, and cutting taxes for 31 million people.”