Universal credit will deter single parents from full-time work
Joe Lepper
Friday, May 20, 2011
Single parents wanting to work full-time will be worse off when the universal credit is implemented, according to the latest analysis of government welfare reforms.
Childcare support and the hours trap by charity Gingerbread and think tank the Resolution Foundation estimates that single parents on the minimum wage will lose 94p out of every pound they earn over 24 hours a week due to the high cost of childcare.
The report adds that the government will fail its own test of "making work pay" when the universal credit is launched in 2013.
Gingerbread chief executive Fiona Weir said: "Prime Minister David Cameron’s high profile pledge to single parents to make work pay will be broken unless the Treasury can find extra funding for childcare."
The research also looked at the earnings of couples and found that a second earner in a couple with two children on the living wage will keep only 9p out of every pound earned over 20 hours a week. If they work more than 30 hours a week they will take home no extra cash at all.
For single parents with a minimum wage job a switch from one to two full days a week will earn just £7.50 extra. A single parent on the same wage switching from three to four days a week will bring in only £3 more each week.
This is the latest report to suggest that the universal credit will be a disincentive for families to work full-time. A report by Family Action released in November last year estimated that 1.35m households will be worse off under the new system.
The universal credit is the centrepiece of the Welfare Reform Bill, which has just completed the committee stage in parliament.
A Department of Work and Pensions spokesman said that parents will be supported with childcare costs through the universal credit. "We are looking at how best this support can be allocated to individuals to ensure that parents have an incentive to work, whilst targeting support at those most in need," he said. "We have been taking time to consider this issue carefully, and have been working closely with relevant organisations, like Gingerbread, on the rate at which childcare will be paid and the way this support will be delivered."