Low income families will be worse off because of cuts to Universal Credit despite tax changes and a higher living wage, a new report has warned.
Research for the Joseph Rowntree Foundation (JRF) found that by 2022, families with one working parent will lose more from cuts to the benefits system than they gain from increases to the living wage.
Single people without children and a hypothetical family of four with two working parents will be better off, the research by Loughborough University suggested. That is if they are earning the national living wage, living in low cost housing and claiming Universal Credit.
But “all households who are out of work will be worse off in 2022” and single-earner households will also struggle, the group said.
JRF chief executive Campbell Robb said: “People across the UK are struggling to afford a decent living standard, even if they have a job.
“Families with only one parent in work are facing particularly hard times, with changes to Universal Credit and other benefits meaning that they are in a worse position even after increases to the national living wage.
“Next week’s budget is an opportunity to help struggling families.
“By ending the benefit freeze and reversing cuts to the amount workers can earn before their benefits are reduced, the Government could make work pay for low income households.
“Without this action, many low paid families will find it impossible to improve their living standards for at least the next five years.”
Donald Hirsch, director of the Centre for Research in Social Policy at Loughborough University, which conducted the study, added: “These figures show that there are a wide range of losers from present policies, with some of the worst off families projected to have to live on barely half of what they need.
“In-work benefits were designed to protect family incomes against hard times, and many of those they have helped are those with fewer opportunities to earn, including lone parents who only have one wage coming in.
“As Universal Credit comes in, it will need to improve what it offers to such families if a steep rise in child poverty is to be avoided.”
It came as another organisation, the Women’s Budget Group (WBG), claimed women and people from ethnic minorities would be “hardest hit” by changes to Universal Credit.
Along with the Runnymede Trust it analysed the effect of cuts to the work allowance, payment freezes and other elements.
More than two million working women who claim the benefit are in line to lose an average of £1,400 a year, it claimed, with black women set to be £1,500 worse off annually.
And tens of thousands of Asian families with three children or more could lose £1,370 due to the new two-child limit, WBG said.
A DWP spokesman said: “The best way to help families improve their lives is by supporting parents into employment – under Universal Credit people are getting into work faster and staying in work for longer.
“There are record numbers of lone parents in work and Universal Credit supports this, offering parents unprecedented personalised support including paying up to 85% of childcare costs back.
“Since 2014 the number of people in absolute poverty has reduced by half a million, and average household incomes are at a record high.
“Children growing up in working households do better in school and are more likely to be in work in adult life. Latest figures show there are over half a million fewer children living in long-term workless households since 2010 and around nine in ten children living with at least one working adult.
“With a near-record level of employment, we’re determined to build on this encouraging progress, and help more people improve their lives through work.”
The DWP added there was now a “near-record rate of women in work”, at 70.6 per cent, up about five percentage points from 2010.
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