DWP urged to scrap Universal Credit earnings deductions for struggling parents

The Department for Work and Pensions has been urged to scrap deductions from the Universal Credit payments of single parents who are working. Under the earnings rules, 55p is deducted from every claimant's monthly benefit payments for each £1 of wages they bring in from a job.

Some people have a work allowance before this deduction is applied. If you get help from Universal Credit with housing costs, your payments will only start to reduce when your monthly wages reach £404. If you don't, the deductions start when your wages reach £673.

The DWP also expects people with work requirements to earn a certain amount while they are receiving Universal Credit. This is called the Administrative Earnings Threshold (AET). In May 2024, the AET increased to £892 per month in gross income for single claimants and £1,437 per month for joint claimants.

However, the DWP has been asked to reconsider its policy for single-parent households who want to work their way out of poverty but are battling against benefit cuts for having a job. A petition has been set up asking for this group of claimants to be exempt from the earnings-based deductions.

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Jessica Roberts has started a campaign on the official UK Government and Parliament Petitions website. Her petition asks the DWP to 'Remove Universal Credit take-home Pay deductions for lone-parent households.'

She explained: "As a lone-parent household, I am continually fighting to keep myself and my children out of poverty, but no matter how much I work, my earnings are capped by Universal Credit deductions. I feel that removing the deductions would allow me to work my family out of poverty.

"Lone-parent households make up around 16 per cent of all UK households. Single-parent employment in the UK has fallen since 2019. In 2019-20, after housing costs, 45 per cent of single parents were in relative poverty, compared to 22 per cent of parents in a couple, and 49 per cent of children in single-parent households were in relative poverty.

"The impact on child health and wellbeing of poverty is well documented. We think that removing the current Universal Credit take-home pay deductions for lone-parent households could give them the opportunity to work themselves out of poverty."

Relative poverty is defined as when household income is below 60 per cent of the average across the UK economy.

If the petition reaches 10,000 signatures, the government will issue a formal response. If it accumulates 100,000 names, it will be considered for debate in Parliament. The petition will run until May 26, 2025.

In July 2024, Prime Minister Sir Keir Starmer announced the creation of a new Child Poverty Taskforce. It first met in mid-August and is expected to publish a strategy for dealing with the issue in spring 2025.

The government said when launching the initiative: "Child poverty has increased by 700,000 since 2010, with over four million children now growing up in a low-income family. This not only harms children’s lives now, but it also limits their future prospects and it holds back our economic potential as a country.

"Tackling child poverty, across the United Kingdom, is at the heart of the government's mission to break down barriers to opportunity and improve the life chances of every child. It is about ensuring a foundation of economic security for families, recognising the importance of happy and thriving childhoods, and a commitment that background must not limit opportunity.

"The role of the Taskforce is to oversee the development and delivery of an ambitious cross-government Child Poverty Strategy to reduce and alleviate child poverty. The aim is to improve children's lives and life chances now and tackle the root causes of child poverty in the long term."

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