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Employment

Forcing working universal credit claimants to do more hours ‘does nothing to help childcare crisis’

Chancellor Kwasi Kwarteng has said introducing penalties for people who work part-time and claim universal credit will “boost incomes for families”

Plans to force universal credit claimants working part-time to take on more hours have been slammed by mothers’ rights campaigners.

Under a shake up of the system by chancellor Kwasi Kwarteng, claimants working under 16 hours a week and earning minimum wage will have to meet regularly with their work coach and take “active steps” to increase their hours or face having their benefits cut. Around 40 per cent of people on universal credit are already employed.

The move has been criticised by working mothers group Pregnant Then Screwed, which said it does “nothing to improve the infrastructure which would enable mothers to work longer hours”.

The measures would “increase child poverty in one simple step” the group added.

Looking after children or incapacitated adults was the most popular reason given by women who work part-time, in a 2018 study of working aged adults in the EU by Eurostat.

For low paid working parents, the increased childcare costs necessary to enable them to increase their working hours practically nulls out the increased income, researchers at The Institute for Public Policy Research (IPPR) found in a new report published on Thursday.

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The think tank found once parents have paid their childcare costs plus taxes, national insurance, and had their taper rate deductions if claiming universal credit, for many it is almost financially not worth going to work.

“The current childcare system has now created an environment which disincentivises parents from work”, said Henry Parkes, IPPR senior economist. “In the midst of a cost of living crisis, it is nonsensical and impractical to have families who are worse off in employment. You should not be worse off from working more. The system needs change.”

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The IPPR found the UK has the second highest childcare costs in the developed world, with part-time care for a child under two setting a parent back £7,000 a year.

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The government is hoping the move will get more benefits claimants into full time work to abate the growing recruitment crisis and help to stimulate the economy.

But the measure will only affect around 120,000 part-time workers, and have a negligible 0.01 per cent effect on the economy, according to the Financial Times’ Chris Giles

The announcement comes on the day the real living wage, set by independent charity the Living Wage Foundation, has brought a 10 per cent pay rise for over 400,000 low-paid workers.

A Treasury spokesperson said that people who work extra hours will be better off, as their income will be higher than what they would otherwise receive through universal credit.

Kwasi Kwarteng said the gradual changes “focus on getting people back into work and maximising the hours people take on to help grow the economy and raise living standards for all.”

“It’s a win-win. It boosts incomes for families and helps businesses get the domestic workers they need, all while supporting economic growth”, he continued.

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