Universal Credit (Children) — House of Commons, 2016-05-10
Topic: Social Welfare
Eilidh Whiteford (Scottish National Party, Centre-left): We have had an unexpectedly concise, but nevertheless interesting, debate is afternoon. I echo the remarks of others who have paid tribute to the right hon. Member for East Ham (Stephen Timms) for securing the debate and giving us this opportunity to highlight the impacts that the universal credit scheme will have on children. Right at the heart of this matter are the recent cuts to the work allowance—implemented just last month—which are set to drive up child poverty quite considerably in the months and years ahead Back in January, when the Government performed their U-turn on tax credits, it was clear that the relief would be only temporary for many families. As we have heard today, the transition to universal credit will mean that 3 million working families will no longer be eligible for the support that they would have had under the tax credits system. A further 1.2 million working families will still receive support, but will be worse off. Therefore, according to the Resolution Foundation, 4.2 million families will be on average more than £40 a week worse off, even taking into account increases in the minimum wage and tax allowances When universal credit was first introduced, we were told that it would simplify and streamline our benefits system, that it would introduce greater flexibility for those in seasonal jobs or with fluctuating earnings and, crucially, that it would remove the financial disincentives to work created by the previous system. However, that is not what is happening in reality. The introduction of universal credit has simply been an excuse to cut family incomes, taking £3 billion a year out of the pockets of low-paid parents. As the Resolution Foundation report puts it, the latest cuts to universal credit risk leaving it "little more than a vehicle for rationalising benefit administration and cutting costs to the Exchequer." That is a truly damning indictment The bottom line is that cutting the work allowance under universal credit has destroyed the very aspect that reduced work disincentives—the thing that made it a distinctive policy. The most potentially valuable aspect of universal credit has been butchered, and we are now left with a system that will reduce the incomes of more than 4 million low-income families. People are already working hard to support their families and are struggling to make ends meet. The change is set to send child poverty skyrocketing over the next few years. Far from creating work incentives, the reality is that cuts to the work allowance mean that parents in low-paid jobs face staggering levels of marginal taxation if they take on extra hours. There is no way around the fact that that reduces the incentive to take on extra work. If someone is going to be only 35p in the pound better off per hour, the extra earnings might not even cover their transport costs, much less their childcare Working single parents will be particularly badly affected by the changes, because they are being hit with dramatic income cuts. There is also a big disparity between those who live in rented accommodation and those who are owner-occupiers or otherwise not paying housing costs. In rented accommodation, a working couple with children will lose £234 a year, and a working single parent will lose £554 a year. The reductions in income are even starker for those not in rented accommodation. A working couple with children will lose more than £1,000 per year, but working single parents are set to lose a massive £2,628 a year on average.