Social Justice

Millions of families on universal credit worse off by £1,400 a year, experts say: 'It needs to change'

Disabled people face the biggest losses. A single person with a long-term disability that prevents them from working will now be £2,800 per year worse off

universal credit

Millions are worse off after the switch to universal credit. Image: Pexels

Millions of families on universal credit are £1,400 poorer on average in real terms now than they were on the legacy benefits system a decade ago, new research has found.

The Resolution Foundation has revealed that than seven in 10 (71%) of the 9.8 million families who are eligible for universal credit or legacy benefits are worse off in real terms on universal credit in 2024-2025 than they would have been under the legacy benefits system in 2013-2014.

This equates to more than 6.9 million families worse off by an average of £1,400 each year.

The researchers said this is largely due to cuts in overall levels of working-age support including multiple years of freezes and below-inflation uprating of benefits. It means that the base rate of out-of-work support is 6.7% lower in real terms in April 2024 than it was in April 2023.

Disabled people face the biggest losses. A single person with a long-term disability that prevents them from working will now be £2,800 per year worse off.

Dan Scorer, head of policy at learning disability charity Mencap, said “We are deeply concerned that hundreds of thousands people with a learning disability will be worse off under changes to universal credit.

“In the last decade, benefit rates have eroded, and people with a learning disability, especially those who are not able to work, have been disproportionately affected. Current benefit rates are not enough to cover the extra costs many people with a learning disability face or even their basic essentials.

“The government need to review the adequacy of benefits so that people with a learning disability are no longer faced with these horrendous decisions and are supported to live happy and healthy lives.”

But some people are better off. The biggest beneficiaries of the switch to universal credit are working families in rented accommodation. For example, a renting single parent who works 30 hours per week on the national living wage will be nearly £3,800 per year better off in 2024-25 than if they were on the old system.

Across the 2.7 million families in the private rental sector that are eligible for universal credit, the average gain compared to the old system is £1,200.



The next government will be the first to manage a fully-launched universal credit system. Its 15-year roll out has been characterised by welfare cuts and, by 2028, entitlements to universal credit will total around £86bn a year. This is £14bn less than if the government had kept the 2013-14 benefit system

Alex Clegg, economist at the Resolution Foundation, said: “Whoever wins the next election will be governing a ‘universal credit Britain’, with seven million families eventually receiving the new benefit. It is vital that they understand both the system they will inherit and the population that relies on its support.

“A lot has changed since universal credit was first introduced back in 2013. The working-age benefit system is less generous, with entitlement down by £14billion. The reform was designed to meet the 2010s’ problem of high unemployment, but Britain in the 2020s faces new challenges from an older and sicker population.”

The Resolution Foundation has highlighted that the universal credit system was designed to “make work pay” with a conditionality regime. Around 2.7 million universal credit claimants are subject to some form of conditionality, compared to 1.1 million in the legacy system back in 2013-2014.

Britain today faces different labour market challenges. The unemployment rate has fallen from 8.5% in 2011 to just 3.8% in 2023, but economic inactivity due to poor health is at near-record levels.

The number of benefit claimants who are out of work because of ill-health has almost doubled since universal credit was first introduced and stands at 2.3 million now. It comes as both Labour and Conservative parties set out plans to drive more people into work.

Clegg added: “Compared to the old system, universal credit offers greater support for renters and stronger incentives to enter work. But its original design did not anticipate there being over two million claimants with poor health or disabilities. Alongside efforts from the NHS, education, and labour market policy to address the drivers of ill-health, universal credit will need to change to tackle Britain’s new challenge of long-term sickness.”

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