DWP Universal Credit change call as some people '£2,800 per year worse off'

a Universal Credit sign on a door of a job centre plus
A Universal Credit sign on a door of a job centre plus -Credit:PA

The Universal Credit system will need a drastic overhaul as research reveals some individuals could be left £2,800 worse off each year. It's suggested that changes are urgently needed to support an ageing and increasingly unwell population, a think tank has said.

The Resolution Foundation pointed out that the volume of benefit claimants out of work due to ill health has nearly doubled to 2.3 million since the introduction of Universal Credit.

Correspondingly, significant changes to the benefit system and Universal Credit will be needed to effectively cater to the growing needs of an older and more unwell populace, says a think tank. The number of benefit claimants unable to work due to poor health has almost doubled since Universal Credit was first launched, touching the figure of 2.3 million, as stated by the Resolution Foundation.

READ MORE: DWP confirms key dates for Universal Credit benefits change that impacts 500,000 people

READ MORE: Use WASPI calculator to see if you can claim up to £2,950 compensation

Both the country and its benefit system have undergone significant transformations since Universal Credit was rolled out in 2013, the report observes. The unemployment rate has seen a decrease from 8.5% in 2011 to a modest 3.8% in 2023, reminded the foundation.

"Whoever wins the election will be governing a 'Universal Credit Britain', as the final stage of what has been the biggest benefit reform in a generation is due to end with a system covering seven million families by 2029," the report forecasted. As per recent announcements, the Government is aiming to implement changes to Universal Credit intended to motivate those suffering from poor health to seek employment, reports Nottinghamshire Live.

The foundation, which aims to improve living standards for those on low to middle incomes, has stated that the next general election winner would need to build upon these plans. They also noted that Universal Credit (UC) alone could not address the increasing issues of sickness.

By 2028, UC entitlements are projected to total around £86 billion annually, which is £14 billion less than if the Government had maintained the benefits system from 2013/14, according to the foundation.

The report revealed that seven out of ten families (71%) eligible for either UC or legacy benefits would be financially worse off in real terms on UC in 2024/25 compared to the legacy system in 2013/14. However, this was primarily due to cuts in overall levels of working-age support, rather than the design of UC itself, the foundation explained.

The study suggested that the biggest beneficiaries from the transition to UC were working families living in rented accommodation. A single parent renting and working 30 hours per week on the national living wage would be nearly £3,800 per year better off in 2024/25 than if they were on the old system, the foundation estimated.

Among the 2.7 million families in the private rental sector eligible for UC, the average gain compared to the old system was £1,200. However, the report also highlighted that the streamlining of disability premiums meant that claimants with disabilities who were out of work were likely to be worse off under UC.

A single individual with a long-term disability preventing them from working could find themselves £2,800 per year poorer, according to the foundation. "Universal Credit also shifted the make-up of support for people with ill health and disability, with the result that disabled people are among the biggest losers, on average, from the reform," the report stated.

"Single people with a disability that prevents them from working ie those who would previously have been in the Employment and Support Allowance (ESA) support group and in receipt of Personal Independence Payment (Pip) are around £2,800 per year worse off on Universal Credit in 2024/25 than on legacy benefits once any transitional protection has been eroded or lost."

"This is because the element of Universal Credit covering ill health is set at a lower rate than the combination of ill-health support and disability premiums in ESA."

Alex Clegg, economist at the Resolution Foundation, commented: "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 £14 billion. And while the 2010s' problem of high unemployment has faded, Britain faces new challenges from an older and sicker population."

"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, UC will need to change to tackle Britain's new challenge of long-term sickness. ".

A Department for Work and Pensions spokesperson said: "Universal Credit has proven itself as a modern benefits system fit for the future, providing a vital safety net to millions while helping people move into work faster. "We boosted benefits by 6.7% this month, worth £470 for 5.5 million households on Universal Credit.

"Work is the best path to long-term financial security and through Universal Credit, our £2.5 billion Back to Work Plan will help over a million people including those with long-term health conditions find, stay and succeed in work."

Get more news from KentLive straight to your inbox for free HERE.