Today, Wednesday 2 October, sees the launch of Gingerbread’s report on the effect of Universal Credit on single parent families. Credit Crunched: Single parents, universal credit and the struggle to make work pay by Professor Mike Brewer and Dr Paola De Agostini at the Institute for Social and Economic Research found that although many single parents out of work will benefit from working short hour jobs, overall, single parents will be the biggest losers under universal credit.
There are currently two million single parents in the UK and children in single parent families are twice as likely as children in couple families to live in relative poverty. Estimate show that almost all single parents will be eligible for universal credit with the intention of making work pay.
The report explores the likely impact of universal credit on the incomes and work incentives of single parent families. Looking at three different types of single parent household; those where the parent is not working, the parent is working and earning the national minimum wage and those where the parent is working and earning above the minimum wage, the researchers highlight the differential effect of universal credit as a function of their level of employment.
Single parents in all three categories will lose out in cash terms under universal credit, but single parents who are working will lose a greater proportion of their income than any other household type. Conversely, single parents looking to enter employment will have strong financial incentives to do so until they begin working more than 20 hours per week.
Gingerbread suggest two changes to how universal credit is calculated, which would increase the financial incentives to work longer hours; increasing the amount claimants can earn before universal credit begins and reducing the rate at which benefits are taken away from earnings. They also state that more should be done to address single parents’ barriers to work such as the cost and availability of childcare and a lack of flexible jobs.