Struggling to make ends meet

Making ends meet
Published on Tuesday, 13 November 2012 14:31
Written by Caroline Davey

In just a few weeks the Chancellor will make his autumn statement, announcing key details about how the new system of benefits and tax credits will operate when it is introduced next year

Universal credit has been championed by ministers as the solution to an ailing benefits system that currently fails to make work pay. But as Gingerbread's new research 'Struggling to make ends meet' shows, unless the government gets it right on the detail, universal credit will fail to provide all working single parent families with a route out of poverty, and will act as a disincentive to work longer hours for some.

There is no doubt that universal credit has the potential to help single parents by simplifying the system, and in particular should improve work incentives for single parents entering work on small numbers of hours. But our research shows that, unless greater investment is made in the universal credit system, the government simply won't fulfil its promise that every additional hour of work will always pay. Far too many single parent families will continue to find themselves trapped on low incomes, and unable to raise their incomes through working longer hours.

In particular, single parents with high childcare and housing costs could find themselves stuck on a financial plateau, where working longer hours makes little financial sense. And when you consider that the proposed maximum limits for childcare costs under universal credit – £175 per week for one child and £300 per week for two or more children – haven't changed since they were set at that level for tax credits in 2005, you can start to see why. Childcare costs have soared in the intervening period, of course, meaning that parents will be paying more of their childcare costs under universal credit, which can make working longer hours simply not worth it.

Also today, Nick Clegg is announcing plans to extend the right to request flexible working to all employees, and to enable much greater sharing of parental leave. These are part, he says, of the government's commitment to support families to balance work with bringing up their children as they "juggle their busy lives". While this commitment is welcome, it is vital that the government backs it up with tangible changes to universal credit that we know would make a practical difference to families on the ground. Ensuring that it is always financially worthwhile to work – and to work more hours – is crucial to helping parents bring up their children, and to delivering on the government commitment to be the "most family friendly country in Europe".

The forthcoming autumn statement is the government's opportunity to make good on this promise. Let's hope they take it.

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