Work won't pay under reforms

Plans to introduce a single universal credit to replace all existing benefits were revealed by the government last week. This will involve the introduction of a new single rate at which people's benefits are withdrawn to take account of earnings, which could disadvantage some families, according to Family Action.

Sam Royston, policy officer at the charity, said families in work paying income tax, national insurance and receiving working tax credits - but no other means-tested benefits - currently keep 30 pence in every pound they earn for any extra hours worked.

But under the new system, these families will retain only 24 pence in the pound.

"A lot of households will see an increase on deductions," he warned. "These families will receive less incentive to work longer hours or get a promotion."

According to Liz Gardiner, policy officer at Working Families, the government's drive to make work pay is also at odds with earlier changes announced in the spending review, which require couples with children to work 24 hours a week between them to receive working tax credits from April 2012, as opposed to 16 hours.

Gardiner said: "Changes to working tax credit, which decrease work incentives, make the situation worse for parents before it gets better. Families we speak to find it hard to even work 16 hours."

Families unable to find extra work could be around £73 a week worse off until 2016 or 2017, when the new system is fully operational, she added.

Caroline Davey, director of policy at single-parent charity Gingerbread, urged the government to clarify plans on supporting parents with childcare costs.

On proposals to pay the universal credit monthly rather than fortnightly, Davey warned that mistakes could seriously disrupt family finances. "If you are depending on one monthly payment and miscalculations are made, that could be really problematic," she said.