Laura Sharman 12 April 2018

Research warns of 'design flaw' in Universal Credit

A ‘design flaw’ in Universal Credit is leaving self-employed workers at a financial disadvantage, new research has warned today.

Two reports from Citizens Advice has revealed that the government’s welfare reforms are adding to the financial instability of low-income workers, with those who are self-employed likely to come under the most pressure.

The analysis has identified a ‘design flaw’ in the reforms which assumes that everyone claiming Universal Credit who has been self-employed for a year or more is earning the National Minimum Wage. Their Universal Credit payment will not make up the difference if they earn less than this one month.

This means that a self-employed worker who receives Universal Credit could be worse off by £630 a year compared to an employee on the benefit.

The second report finds that people receiving in-work benefits could also be worse off due to the reduced work allowance.

Gillian Guy, chief executive of Citizens Advice, said: ‘The Government has shown it is prepared to act to improve Universal Credit as new facts come to light - an approach we strongly support. It now needs to look again at the design of the benefit to ensure self-employed and agency workers aren’t left at a financial disadvantage.’

‘It should also reassess the work allowance reductions to ensure workers who can’t increase their income through employment aren’t left struggling to make ends meet, while better incentivising those who can.

'A failure to do this risks undermining two of the core purposes of Universal Credit - to incentivise people to move into and progress in work, and provide low-income families with financial security.'

Imran Hussain, director of policy & campaigns at Action for Children, warned: 'Universal Credit is so complicated that even Department of Work and Pensions advisers struggle to understand it.

'The drastic cuts in dedicated help for working families have significantly worsened work incentives and help explain why child poverty is now projected to soar to over five million children by the end of this parliament. All of this is happening at a time when vital early years services are being hollowed out by cuts.'

SIGN UP
For your free daily news bulletin
Highways jobs

Part Time Legal Caseworker - Corporate and Commercial Law

Essex County Council
£25081.00 - £27653.00 per annum + Pro Rata
Part Time Legal Caseworker - Corporate and Commercial LawPermanent, Full Time£25,081 to £27,653 per annum, full time equivalentLocation
Recuriter: Essex County Council

Education Safeguarding Adviser

Essex County Council
£36375.0000 - £42794.0000 per annum
Education Safeguarding AdviserFixed Term, Full Time£36,375 to £42,794 per annumLocation
Recuriter: Essex County Council

Enviro Crime and Enforcement Officer

Royal Borough of Greenwich
SO2 - £38,934 to £40,755
Make a real difference in your community Greenwich, London (Greater)
Recuriter: Royal Borough of Greenwich

White Rose Forest Landscape for Water Project Officer

Kirklees Metropolitan Council
£38,220 - £40,777
The role of Landscapes for Water Project Officer and the White Rose Forest Kirklees, West Yorkshire
Recuriter: Kirklees Metropolitan Council

Finance Manager

Durham County Council
£66,164 to £68,493 p.a. (Band 2)
Are you an experienced finance leader ready to take on a high-profile role at the heart of a major organisational and financial transformation?   Durh Durham
Recuriter: Durham County Council
Linkedin Banner