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Reverse the Universal Credit cuts - a ticking time bomb for millions of low-paid working families

Date: 22 November 2016 Shopworkers' trade union leader John Hannett has called on the Chancellor to use tomorrow’s Autumn Statement to reverse the deeply unfair and damaging cuts to Universal Credit that were introduced by his predecessor.
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.

“Although we won the argument on tax credit cuts, forcing a u-turn from the Government, those cuts are still being applied to Universal Credit. This is a ticking time bomb that will leave many working families much worse-off when they are transferred onto it.

“Tomorrow the Chancellor could restore the original purpose of Universal Credit - to encourage entry to and progression in work. The low work allowance and high clawback rate of 65% of net earnings are particular disincentives to work. The Government needs to look afresh at what Universal Credit means in practice for low and middle income earners and get this troubled project back on track to support, not penalise, working families.

“The Prime Minister has talked about supporting families struggling to make ends meet. The Chancellor has the chance to make good on that commitment tomorrow. Now is the best time to make changes to improve work incentives and ease child poverty as the roll-out of Universal Credit is only just starting, so comparatively few working people are claiming it. Millions of working households are reliant on this crucial support to help make their income meet the cost of living.”

Usdaw’s analysis reveals that a couple with children, both working in retail, earning just above the so-called National Living Wage, one working full-time and one part-time, would be £1,866 worse off on Universal Credit.

The Resolution Foundation says that even when considered alongside policies designed to boost incomes, including the introduction of the National Living Wage and income tax cuts, relative to the current system without those measures in place, the latest version of Universal Credit (UC) implies that:
  • 1.3 million working families entitled to support in the tax credit system will no longer be entitled to any in-work support, leaving them £42 a week worse off on average;
  • A further 1.2 million are set to receive UC, but be an average of £41 a week worse off;
  • 1.7 million still in receipt of UC will be better off by an average of £38 a week, in part due to the more generous treatment of housing costs; and
  • Only around 200,000 families – a mix of those without children and couple parents – who are no are longer entitled to UC at all will be better off overall following cuts to in-work support and boosts to income from the National Living Wage and income tax cuts.
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

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