Universal Credit is widely accepted as the most important social security reform for thirty years. It brings together most of the means-tested benefits and tax credits for people of working age and has dominated policy-making for five years.
While UC does represent a real advance on many aspects of the current benefits system, it has been designed against a backdrop of fiscal austerity and an increasingly dominant discourse which emphasises individuals’ responsibility for poverty.
This has resulted in a series of cuts to UC’s generosity. While the earliest assessment of the impact of UC on poverty estimated that as many as 350,000 children would be moved out of poverty, ministers currently refuse to make an estimate on the impact of UC in its current state.
The reality is that cuts to the generosity of aspects of UC mean that it will not reduce child poverty, and may even drive more children into poverty than before. These cuts include the work allowance (how much a household can earn through work before their benefits are reduced) and the taper rate (how quickly their benefits are reduced as they work more hours), as well as the limit of the child tax credit element of UC to two children only.
At CPAG, we believe that UC will tackle many shortcomings of the current benefits system but critically fails to deal with the issue of adequacy of benefits, while ignoring many of the key structural factors that contribute to child poverty.