William Eichler 27 November 2015

Government cuts set to hit ‘poor working families’

Low-income working households on Universal Credit will lose £1,300, according to the Resolution Foundation.

Calculating the impact of the Government’s Spending Review, the independent think-tank found that those on Universal Credit are set to lose an average of £1,000 in 2020, despite George Osborne’s u-turn on tax credits.

This figure will rise, according to their analysis, to £1,300 for those with children.

The foundation also predicts that losses will be particularly high for large families if the cuts that only affect new welfare claims are added. In this case, some low earning couples with three children could lose £3,000.

A distributional analysis of tax, benefit and minimum wage changes shows, according to the think-tank, that the average loss among households in the bottom half of the income distribution is £650, while there is no average loss in the top half of the distribution.

Commenting on the impact of Government cuts, Torsten Bell, director of the Resolution Foundation, said: ‘All the post-2020 welfare cuts announced in the Summer Budget remain in place and will eventually affect millions of families as Universal Credit is rolled out nationally.

‘New Resolution Foundation analysis shows that these cuts fall overwhelmingly on poor working families.

‘The most damaging changes are to Universal Credit, the Government’s flagship welfare programme which is at serious risk of being undermined. For working households with children on Universal Credit the average loss will be £1,300 in 2020. These changes will also increase the risk of people being trapped in low-paid short-hours work.’

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