Working parents are still set to lose between £2,000 and £3,000 when they are transferred onto Universal Credit which will devastate their family finances and leave them unable to afford the basic necessities.
There is little incentive to work extra hours when the marginal tax rate under Universal Credit is still 75% for income tax payers. Those doing extra hours on the increased rate of National Living Wage will only get to take home £1.89.
John Hannett – Usdaw General Secretary says: “Severe cost cutting has turned the initial intentions of Universal Credit to simplify benefits and improve incentives to work, which we support in principle, into a real threat to the incomes of low-paid working families.
“Today we heard a very modest reduction in the high clawback rate of 65% on additional earnings to 63%. Whilst this is a tiny step in the right direction, it is worth less than £300 for most working parents. It also goes nowhere near taking the taper back to the original 55% or offsetting the enormous £2000 to £3,000 cuts that Universal Credit represents. Over 90% of the cuts are still being applied to Universal Credit, which is a ticking time bomb that will leave many working families much worse-off when they are transferred onto it.
“Today’s Autumn Statement does little to deliver on the Prime Minister’s pledge to support families struggling to make ends meet. A 30p increase in the National Living Wage is welcome but less than expected and action on renter’s fees will help. However, after today’s statement, low and middle income workers are still facing a struggle to secure the income they need to meet the cost of living.”
Usdaw’s initial analysis suggests that a couple with children, both working for the new National Living Wage rate of £7.50 an hour, one working full-time and one part-time, would be £2,881 worse off on Universal Credit compared to the current rate of Tax Credits.
Notes for editors:
Usdaw (Union of Shop, Distributive and Allied Workers) is the UK's fourth biggest and the fastest growing trade union with over 440,000 members. Membership has increased by more than 17% in the last five years and by nearly a third in the last decade. Most Usdaw members work in the retail sector, but the Union also has many members in transport, distribution, food manufacturing, chemicals and other trades.
For Usdaw press releases visit: http://www.usdaw.org.uk/news and you can follow us on Twitter @UsdawUnion