Universal Credit: The real winners and losers

New research has uncovered the real winners and losers under the Government's new Universal Credit regime. Researchers found large gains and losses from Universal Credit are common: 1.6 million adults will gain by more than £1,000 per year and 1.9 million will lose at least that much.

Eleven million adults (and a third of working-age ones) will be in households entitled to some form of Universal Credit. Around 4.2 million of these will be at least £100 a year better off than under the current system and 4.6 million will – after transitional protection expires – be at least £100 a year worse off.

The new study is by Professor Mike Brewer, Director of the ESRC Research Centre on Micro-Social Change (MiSoC) at the Institute for Social and Economic Research at the University of Essex, in collaboration with researchers at the Institute for Fiscal Studies and funded by the Economic and Social Research Council.

The research team digs deeper to examine those households that will lose or gain the most under UC, and whether these effects are short-lived or persistent. Large gains and losses from UC are common: 1.6 million adults will gain by more than £1,000 a year and 1.9 million will lose at least that much.

Among the 1.9 million losing £1,000 a year or more, three-quarters are affected by UC’s harsher treatment of the following groups:

•  those with financial assets greater than £6,000;
•  the self-employed reporting low levels of earnings;
•  couples where one member is above state pension age and the other below;
•  some claimants of disability benefits (though other claimants will gain).

Many of those hit hardest in the short run, such as those listed above, are only temporarily poor.

The briefing note ‘Universal credit and its impact on household incomes: the long and the short of it’ by Mike Brewer, Robert Joyce, Tom Waters and Joseph Woods is available on the  IFS website. www.ifs.org.uk