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Budget changes to Universal Credit go nowhere near far enough to prevent unnecessary hardship for many working families says Usdaw

Date: 22 November 2017 Shopworkers’ trade union leader John Hannett has expressed deep disappointment in today’s Budget, as the Chancellor missed an opportunity to fix the problems with Universal Credit (UC) that cause unnecessary hardship for many working families.

John Hannett Usdaw General Secretary says: “Today the Chancellor had the opportunity to restore the initial intentions of Universal Credit, to simplify benefits and make sure people are better off in work. He could have reversed the severe cost cutting that will leave millions of working families thousands of pounds worse-off.”

Usdaw wanted three fundamental changes to UC that would help to get the troubled project back on track, so it supports working families and doesn’t penalise them:

1. Increase the ‘work allowance’ and reduce the ‘clawback’ to provide a genuine incentive to enter employment and progress in work.

2. Lower the six-week waiting time to counter unnecessary hardship.

3. Address the systemic problem for claimants on weekly and 4-weekly pay.

John Hannett continues: “The Chancellor today ignored the huge penalties on claimants working extra hours, because 63% of their additional earnings are clawed back. This is a particular issue for many Usdaw members who will be working additional hours over the Christmas period. He also ignored the problems weekly and 4-weekly paid workers have with UC.

“The Chancellor’s reduction in waiting time to receive the first payment is welcome, but claimants will still have to wait too long causing an unnecessary hardship on low and middle income families.

“Today’s Budget has done nothing to restore the original purpose of UC. The work allowance remains low and the clawback of net earnings remains high. These are significant disincentives to progression through work.”

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 a year worse off when transferred from tax credits to UC. Also, a worker on UC doing extra hours and earning £7.50 an hour, takes home just £1.89 per hour, often barely covering their travel costs.

Workers who are paid every four weeks or weekly: UC assesses claimants’ income by calendar month, so once a year four-weekly paid workers have two pay days assessed in one calendar month. Four times a year the weekly paid have 5 pay days assessed instead of 4 in a calendar month. When this happens, claimants may lose their entitlement to UC and have to reapply. This is a simple failure to understand the pay arrangements of many low and middle income workers. Most major retailers pay their staff every four weeks, giving them 13 pay days a year and there are still many weekly paid workers, particular in small and medium sized enterprises.

Notes for editors:

Usdaw (Union of Shop, Distributive and Allied Workers) is the UK's fifth biggest trade union with over 430,000 members. Membership has increased by 28% over 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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