UNIVERSAL Credit risks “failing those most in need” if urgent changes are not implemented, a comprehensive review has warned.
The Resolution Foundation, an independent think-tank, insisted the Government’s flagship welfare programme was “a prize worth fighting for” – but argued it would not be a system “fit for modern Britain” unless immediate action was taken.
It outlined proposals to reduce the six-week waiting period and make payments more flexible.
And it argued cuts to Universal Credit mean it is set to be almost £3 billion a year less generous than the tax credit system it replaces.
As a result, the foundation said, it will leave working families an average of £625 a year worse off – with working single parents losing out by an average of £1,350 a year.
David Finch, senior policy analyst at the Resolution Foundation, said the upcoming Budget offered the opportunity to fix the proposals.
He said: “The Government is rightly committed to the roll-out of Universal Credit, but will need to relaunch the benefit to both address the design challenges that are already visible and get ahead of those that will emerge in the years ahead.
“Urgent action is needed to reduce the six-week wait and there are simple steps that can be taken now to bring it down, including scrapping the seven-day waiting period before a claim is accepted.
“Looking further ahead there are major challenges to come, from how childcare is dealt with to ensuring equal treatment of the self-employed.
“Crucially, because Universal Credit is now almost £3bn a year less generous than the benefits it replaces, it will leave working families an average of £625 a year worse off.
“Single parents are particularly hard hit, with almost twice as many losing as will gain, while second earners in couples will also face weaker incentives to work. Now is the time to put right these significant design flaws.
“The upcoming Budget provides an opportunity to relaunch Universal Credit – making it fit for purpose in 21st-century Britain.”
The foundation argued a £3bn re-investment in Universal Credit’s support for working families – including higher work allowances for lone parents and a new allowance for second earners – is vital to ensure parity with the tax credit system it replaces.
It said extra funding could be provided by “delaying a range of tax cuts that disproportionality affect the richest”.
A spokeswoman for the Department for Work and Pensions said: “This report fails to acknowledge the package of support introduced to help people move into work including unprecedented support with childcare costs and wider reforms to taxation and the introduction of the National Living Wage.
“It also assumes benefit claimants’ lives remain unchanged, but the truth is under Universal Credit people are moving into work faster and staying in work longer than under the old system.
“The majority of people are comfortable managing their money, but advances are available for anyone who needs extra help and arrangements can be made to pay rent direct to landlords.”
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