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.
A worker on Universal Credit earning the National Living Wage of £7.20 an hour, takes home just £7.24 for doing an additional 4 hour shift. That amounts to £1.81 per hour, often barely covering their travel costs.
John Hannett – Usdaw General Secretary says: “Universal Credit will plunge far more working families into poverty, which will be almost impossible to work their way out of. We supported the initial intentions of Universal Credit, to simplify benefits and improve incentives to work. However, severe cost cutting has turned Universal Credit into a real threat to the incomes of low-paid working families.
“Although we won the argument on the proposed massive cuts to tax credits, forcing a u-turn from the Government; those cuts are still being applied to Universal Credit and will hit millions of working families over the next 3 years. This is a ticking time bomb that will leave many working families thousands of pounds worse-off when they are transferred onto Universal Credit.
“This week 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 63% of net earnings are particular disincentives to work. After the clawback, tax and national insurance, workers are only taking home 25% of their additional earnings.
“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. 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. In a year or two when it is rolled out further, millions of working households will be reliant on this crucial support to help make their income meet the cost of living.”
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