Universal welfare credit ‘will hit single parents’
By politics.co.uk staff
Plans to reform welfare payments into one universal credit are likely to have a negative impact on single parents, tax experts have warned.
A preliminary analysis of the new system by the respected Institute for Fiscal Studies (IFS) found that couples with children would gain the most from the changes.
The findings are likely to put further pressure on the government for its policies towards single parents. Critics say single parents have already been disproportionately affected by the public spending cuts.
“Couples with children will gain from [the universal credit] and, when transitional protection expires, lone parents will lose,” the report reads.
Families with children with savings of over £16,000 in the bank will also lose out, the institute found.
“Work incentives will be strengthened for some, but weakened for others, and the reform will lead to both winners and losers in the long-run,” said Mike Brewer, deputy director of the IFS.
“One clear group of losers will be families with children having savings of over £16,000: they can currently receive tax credits but will not be eligible for any universal credit.
“This may well focus spending on those who need it most, but also gives families an extremely strong incentive to keep financial assets below this level.”
In total, the institute expect over a million families to lose out in the long run, but about 2.5 million to gain.
The plans are expected to cost £1.7 billion in 2014-15 prices.
The IFS was optimistic that the reduced administrative costs would help save the exchequer money and that the new system would be “more effective and coherent”, however.
