The main group to benefit from funding increases to UC funding have been working-age households who rent, though much of the increase in weekly payments has covered soaring rent bills.
However, single people with a long-term disability that stops them from working will be much poorer after rollout, highlights a new report by the Resolution Foundation think tank.
Higher-income renters also benefit from Universal Credit, as the entitlement for renters extends to much higher earnings levels than it does for “legacy benefits”.
The Foundation said: “Working renters are the biggest winners, on average, and disabled people are among the biggest losers from the reform.
Especially, single people with a disability that prevents them from working – i.e. those who would previously have been in the Employment and Support Allowance (ESA) support group and in receipt of Personal Independence Payment (PIP) – and do not have a full-time carer.
The think tank reports that a single person with a disability that prevents them from working is £2,800 a year worse off when they transfer to UC, and that all single people in this position will suffer this loss of income when the rollout of UC is completed.
The new report outlines the Government’s plans to reduce UC work capability test entitlements before scraping the work capability assessment itself and says: “Universal Credit’s creation of winners and losers is significant enough to shift the composition of the bottom end of the income distribution, making disabled people much more likely to be among the poorest, and workers less likely.
“Compared to the current set of legacy benefits, the full roll-out of Universal Credit would move 550,000 people from families that were previously entitled to ESA into the bottom income decile, while 890,000 people from working families would move out of the bottom decile.”
Alex Clegg, an economist at the Resolution Foundation, said “UC was conceived in an era of high unemployment and was ill-equipped for a post-pandemic age when many claimants were suffering from long-term illnesses and disability. Compared to the old system, Universal Credit offers greater support for renters and stronger incentives to enter work,” he said. “But its original design did not anticipate there being over 2 million claimants with poor health or disabilities.
“Alongside efforts from the NHS, education, and labour market policy to address the drivers of ill-health, UC will need to change to tackle Britain’s new challenge of long-term sickness.”
For more information see the Resolution Foundation report In credit available from resolutionfoundation.org.
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