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Government claim that universal credit will always make work pay for single parents is at risk of failure, new research shows

13 November 2012
Universal credit will fail to provide all working single parent families with a route out of poverty, and act as a disincentive to work longer hours for some, reveals new report ‘Struggling to make ends meet’ by Donald Hirsch from the Centre for Research in Social Policy at Loughborough University, and published by Gingerbread today [1].

Almost 2 million single parent households will start to move onto universal credit from next year, but the rising costs of childcare and housing, combined with the way universal credit is calculated, will mean that many families get stuck on a financial plateau where working longer hours will make little financial sense [2].  Despite repeated government claims that universal credit will mean that working an additional hour will always be financially worthwhile [3], for some single parents – particularly those with high housing or childcare costs – current plans will mean their families get stuck below the poverty line, while others will still fall short of the minimum income standard, used to measure how much money families need to participate in society.

Ahead of next month’s Autumn Statement, where more detail is expected on plans for universal credit, Gingerbread is calling on the government to ensure that its final decisions on the amount awarded within universal credit mean that work always pays for single parents, even after childcare and housing costs have been paid.  The charity argues that to do this the government should consider giving more substantial support for childcare costs, increasing the amount that single parents can earn before universal credit is withdrawn, and reducing the rate at which it is tapered away once earnings pass that crucial threshold.

Gingerbread chief executive Fiona Weir said: “Through universal credit the government has the opportunity to make work pay and offer real financial incentives for families on low wages to work more hours – which many want to do. However, we have discovered that for many single parents, working longer hours won’t necessarily pay.

“This is about supporting single parents into work, into more hours and to lift their families out of poverty – which is exactly what the government claims it wants to do. But unless the government gets it right now, the sums just won’t add up for too many single parents.”

Gingerbread’s report has projected family finances for working single parents on low and median incomes, looking at how their income under universal credit is affected dependent on how many children they have, their ages and where they live in the UK.

Key findings show that, under universal credit:

• A single parent earning the minimum wage couldn’t expect to see their disposable income increase by much once they start working more than ten hours a week

• A single parent earning a median salary may actually be worse off working full-time hours than part-time, undermining the government’s pledge to make work pay. This 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 single parent with two young children would on average have childcare costs above the cap if they work full time, making it against their interest to do so.

The report is being launched today (Tuesday 13 November) at a Westminster seminar featuring Dame Anne Begg MP, Chair of the Work and Pensions Select Committee, as well as the report’s author Donald Hirsch. For more detail on Gingerbread’s findings see the attached report, or visit report forms part of Gingerbread’s Make it work for single parents campaign, which is pushing for a comprehensive approach to ensure that all single parents have access to a decent job that allows them to lift their family out of poverty.


Gingerbread spokespeople and Donald Hirsch are available for interview on request. We have an ISDN line available for radio interviews.

Media contact:

Faith Dawes, Gingerbread: 020 7428 5416

Out of hours: 07881 951138

Notes to editors

Currently, 1 in 4 single parents working part time, and 1 in 5 single parents working full time, are in poverty (DWP, 2012).

[1] Hirsch, D (November 2012) Struggling to make ends meet: single parents and income adequacy under universal credit

[2] Hirsch, D (November 2012) Struggling to make ends meet: single parents and income adequacy under universal credit

[3] E.g. Iain Duncan Smith: “[Universal Credit] will make work pay, at each and every hour”

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