The stark analysis commissioned by the Local Government Association (LGA) found that of the 2.14 million working-age households are set to lose more than £50 a week by 2020, the majority (1.34 million) are in work.

The majority of those households receive working tax credits and will face a "significant loss in income" when they transition to the Government's flagship universal credit (UC) welfare system, aimed at streamlining benefits, the Policy in Practice study said.

Usdaw’s own 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 Universal Credit. Also, a worker on Universal Credit 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 improve incentives to work.  However, severe cost cutting has turned Universal Credit 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 to restore the original purpose of Universal Credit, 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 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 helping families who find it difficult to make ends meet, this report from the LGA shows there is still a long way to go. 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 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