A number of big changes to Universal Credit will be introduced next month with some families warned they will be left worse off.
The government will be rolling out its six-in-one benefit Universal Credit to every Jobcentre by the end of the year which will mean big changes.
Universal Credit aims at simplifying the welfare system with this new one monthly payment to replace the following benefits.
- Child Tax Credit
- Housing Benefit
- Income Support
- Income-based Jobseeker’s Allowance (JSA)
- Income-related Employment and Support Allowance (ESA)
- Working Tax Credit
It's planned that Universal Credit will replace all of these benefits in March 2022.
However, four big changes to Universal Credit will come into effect on April 9 with one think tank warning it will be bad news for 'just about managing families' across Sheffield.
The Resolution Foundation has explained that the changes are set to save around £2.5bn - the second biggest welfare saving in a single year since the crash.
The cuts will reportedly affect 11 million families overall, including five million of the 'just about managing families', the think tank has warned.
The four key benefits cuts being introduced on April 9 are:
- Year three of the four-year cash freeze in working age benefits, saving £1.9bn and affecting almost 11 million families. The 3% real terms cut in working age benefits this year is set to be by far the biggest of the four-year benefit freeze.
- Two child limit for benefit claims, costing up to £2,780 to a family having a third child, saving £400m this year and affecting 150,000 families.
- Withdrawal of the family element of support for new tax credit and universal credit claims from families with children, costing up to £545, saving £200m this year and affecting 400,000 families.
- Rollout of Universal Credit, saving £200m this year due to lower entitlements than the existing benefit system for long term sick and working families in particular.
David Finch, Chief Analyst at the Resolution Foundation said that just about managing families are set for an average loss of £190 this year.
However, he said that some families will be thousands of pounds worse off compared to a scenario in which the cuts didn't take place.
He said: "The government is doing the right thing on pay with another big rise in the National Living Wage and ending the cap on public sector pay. But for many families the extra pay will be outweighed by the £2.5bn worth of benefit cuts being rolled out.
“With an average loss of £190, low and middle income families are set for the second biggest welfare squeeze since the crisis, at a time when pay growth remains muted and household incomes are already under strain.
“The Chancellor is keen to stick to his brief of a short speech with no new policies. But given the financial challenges facing families across Britain, a quick change of his predecessor’s policies on benefit cuts would go a long way towards showing that he is on the side of hard-pressed working families.”
However, the Conservatives have said that Universal Credit will help people into work by ensuring they are better off working than being unemployed.
Today, the Government has hailed new figures showing a fall in the number of people living in poverty in recent years.
Ministers said it was "fantastic news" that one million fewer people were in absolute poverty compared with 2010.
The income gap between the richest and poorest had also fallen, with the poorest fifth of households having an extra £1,000 a year.