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 on UC. Also, a worker on UC earning £7.50 an hour, takes home just £7.55 for doing an additional 4 hour shift. That amounts to £1.89 per hour, often barely covering their travel costs.
John Hannett Usdaw General Secretary says: “We supported the initial intentions of Universal Credit, to simplify benefits and make sure people are better off in work. However, severe cost cutting has turned UC into a ticking time bomb that will leave millions of working families thousands of pounds worse-off when they are transferred onto it.
“The Government now needs halt the roll-out, instigate a review and restore the original purpose of UC, to encourage entry to and progression in work. The low work allowance and high clawback of net earnings are particular disincentives to work. There needs to be a fresh look at what UC means in practice for low and middle income earners and get this troubled project back on track to support not penalise working families.
“There is also a particular concern for those workers who are paid every four weeks or weekly. UC assesses claimants’ monthly income, so once every year four-weekly paid workers have two pay days assessed in one month, and those who are paid weekly have 5 pay days assessed instead of 4. When this happens, claimants often do not qualify for any UC payment in that month so they lose their entitlement. They are not told this, so the next month they find they have not been paid and have to reapply to get back onto UC. This means that they lose entitlement for the period that they were not paid and as UC is paid in arrears this can mean a further wait of up to five weeks before payments come through.
“It is an unnecessary hardship caused by a simple failure to understand the pay arrangements of many low-paid 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. The Government could quite easily change this with little cost and there would be a long-term saving in administration. At the very least, Government should warn UC claimants who are paid weekly or 4-weekly that this will happen and inform claimants who fall out of UC due to their income rising one month that if it falls the next month, that they will need to reclaim immediately so as not to miss out on much-needed support.
“The Prime Minister has talked about helping families who find it difficult to make ends meet, but we have seen no progress and in fact many working people are becoming worse-off. With the cost of living rising, working families need the Government to change course and provide the support they need.”
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 more than 20% in the decade. Most Usdaw members work in the retail sector, but the Union also has many
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