After the change to universal credit, almost 2 million people will lose over £1,000 a year, according to research by a leading thinktank.
The Institute for Fiscal Studies further said that among the biggest losers will be low-income families with a small amount of savings and self-employed workers on below average incomes. The disabled will also be affected, but the persistently poor will be hit the hardest. This comes as the government plans the biggest overhaul of the benefits system since the introduction of tax credits in 2003.
The Guardian claimed that the benefit clawbacks, which will impact roughly half of the claimants, are expected to provoke outrage from anti-poverty charities who have accused ministers of sanctioning over a decade of austerity on some of the UK’s most struggling households.
Earlier this month, welfare claimants entered the fourth year of the benefits freeze imposed by George Osborne in 2016, which has delivered cumulative savings of £4.4bn already.
In March, the annual Households Below Average Income (HBAI) report covering 2017-18 discovered that 3.7 million people were living in absolute poverty, more than the 3.5 million in 2016-17.
Universal credit merges numerous benefits that were previously paid to claimants individually. These include housing benefit, child tax credit and jobs seekers allowance.
The IFS claimed 11 million adults would either lose or gain due to new regulations governing UC pay-outs, with 1.6 million gaining over £1,000 a year and 1.9 million losing at least that much.
The Guardian claim that roughly 4.2 million will be at least £100 better off per year under the new system and 4.6 million will be at least £100 worse off after transitional protection expires, according to the IFS.
The research monitored previous claimants and concluded that the circumstances of many low-income families will get better, and they are likely to reduce their losses after 8 years. The report said that, for some, losses will fall from £1,000 closer to £100.
However, those who either are disabled or live with a disabled person are particularly likely to be persistently, rather than temporarily, poor. But circumstances will dictate whether they lose or gain.
After the expiration of transitional protections, those who would have been entitled to the severe disability premium (normally live alone and struggle with basic living activities like preparing food) could receive as much as £2,230 less a year. However, those whose health is deemed to impact their ability to do paid work but not their ability to perform basic living activities could get £1,120 more a year.
A research economist at the IFS and an author of the briefing note, Tom Waters, claimed: ‘The biggest losses experienced as a result of the switch are mostly down to a small number of specific choices the government has made about universal credit’s design, such as its treatment of the low-income self-employed and people with financial assets.’
He further said: ‘Many of those very large losses do turn out to be temporary for those concerned. However, even when measuring people’s incomes over relatively long periods, universal credit still hits the persistently poor the hardest on average.’