‘Little gain’ for lone parents under universal credit

The new universal credit scheme will leave most lone parents with incomes that are too low to provide a decent minimum standard of living, according to a report for the campaign group Gingerbread. The group calls for further steps to improve work rewards under the scheme.

Key points

  • A lone parent earning the minimum wage can’t expect to see their disposable income increase by much under the universal credit once they start working more than 10 hours a week.
  • A lone parent earning a median salary may actually be worse off working full time than part time, undermining the government’s pledge to make work pay.
  • The situation has been made worse by the failure to increase the cap on reimbursable childcare costs, at a time when these costs have been rising rapidly. In London, for example, a lone parent with two young children would on average have childcare costs above the cap if they worked full time, making it against their interest to do so.

Gingerbread say the government must ensure work always pays for lone parents under the universal credit, even after childcare and housing costs have been paid. The government should consider giving more substantial support for childcare costs, increasing the amount that lone parents can earn before universal credit is withdrawn, and reducing the rate at which it is tapered away once earnings pass the crucial threshold.

Source: Donald Hirsch, Struggling to Make Ends Meet: Single Parents and Income Adequacy under Universal Credit, Gingerbread
LinksReport | Gingerbread press release | Inside Housing report | Telegraph report