IFS Report Poorest 10% Will Be Worst Hit by Universal Credit

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The Institute for Fiscal Studies (IFS) have released a damning report on Universal Credit and how it will affect claimants financially in the future. The report states that while some will benefit, the poorest 10% of claimants will be an average of £150 worse off per year. Worse still, claimants with a long term disability will be especially hit.

The Institute for Fiscal Studies (IFS) is a highly respected, independent research body. They are politically independent and regularly publish reports on academic and policy related findings.

The government are usually keen to highlight IFS studies although it is unlikely they will in this instance.

The study titled; “Universal credit and its impact on household incomes: the long and the short of it,” concentrates on the financial effect Universal Credit will have on different claimant groups in the long term.

It the Executive Summary, it is clear that the full report will be bad for the government.

Some of the Key Findings were;

  • “UC disproportionately reduces incomes among poorer adults.”
  • “Four specific choices that the government has made account for many of the large losses.”
  • “UC hits the persistently poor harder than those with higher longer-term incomes.”

The report details that up to 1.6 million adults will gain more than £1,000 extra a year but, 1.9 million will lose at least that much. So the government’s usual response that more people will gain doesn’t not hold weigh this time.

Most hit hardest are likely to find themselves temporarily poor.

The exception to this trend are those who claim disability benefits and the IFS noted that this group is;

“especially likely to be persistently, rather than temporarily, poor”.

Those previously entitled to the ‘severe disability premium’ – generally given to those living alone and who struggle with basic living – could lose up to £2,230 a year.

Yet again here is proof that Universal Credit is targeting those with disabilities. The mountain of evidence to support this is overwhelming, surely something has to change.

Poorest Hit Hardest

The IFS were damning on how the benefit will hot the poorest claimants.

“as an overall cut to benefits, universal credit hits the persistently poor harder than those with higher longer-term incomes”

The research showed those whose average incomes over eight years are in the lowest tenth of the population, lose on average 1.1% of their income over the eight years from universal credit. This more than any other income group they looked at.

This is evidence in black and white showing that the government is making the poor, poorer. It is a damning indictment of how claimants are treated like a commodity rather than a human.

If you are unable to work, you are discarded by those meant to protect you. Piece by piece the welfare state is being dismantled.

IFS Author Says Changes are Intentional

Tom Waters, an author of the report was scathing in his analysis:

“Universal credit changes benefit entitlement for three-quarters of those entitled to means-tested benefits, and 30% see a change of at least £1,000 per year.

“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.

“Many of the 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.”

This response by the IFS is possibly the most difficult for the government to explain away. Waters has stated that these cuts are intentional. Normally this would be damning but, given how the Tories and the DWP have reacted to previous reports, it is unlikely to have an effect.

Labour’s Shadow Work and Pensions Secretary, Margaret Greenwood commented on the findings saying:

“Universal credit was supposed to lift people out of poverty but this analysis makes clear that it is hitting the poorest hardest.

“Pensioners with working-age partners and disabled people who would have been eligible for disability premiums are among those to receive the harshest treatment under universal credit.”

DWP Response

DWP Sign Caxton House

When asked for a comment on the report, a Department for Work and Pensions spokesperson told me;

“This report wrongly assumes that everyone was claiming their full benefit entitlement under the old system, which they weren’t because the system was overly complex.

“With recent work allowances changes, 2.4 million households will be up to £630 per year better off and people will access around £2.4 billion of previously unclaimed benefits.”

In summary, this report just adds to the massive pile of evidence showing that Universal Credit is unfit for purpose.

As usual, the DWP have issued a stock soundbite without addressing any of the concerns raised. This government simply cannot accept they get anything wrong.

In my humble opinion, this government have been repeatedly shown to be causing intentional harm. The UN have said it, charities have and now the IFS have.

Something has to change. Somebody needs to do something. But who?