Keeping more of what you earn

22nd Oct 2017

JRF is calling for people to be able to keep more of what they earn under Universal Credit in order to reduce in-work poverty, delivered by increasing the work allowance.

By the end of this parliament Universal Credit (UC) is expected to be fully rolled out.  This new integrated benefits system for people both in- and out-of-work will shape the living standards of the lowest income families in the UK.  Part of the rationale for UC was making sure people are better off working. It is right that families should be able to better their living standards through work, yet in the UK today, the majority of people experiencing poverty live in working households.

This briefing highlights that:

  • Working poverty is highest among lone parents and couples with children with only one earner or where no one works full time.
  • Among households in working poverty that do not have all adults in full time work, over four in 10 have children of primary school age or below; two in 10 have children under the age of three. Some three in 10 contain a family member with a disability.
  • JRF is calling for people to be able to keep more of what they earn under Universal Credit to reduce in-work poverty. Restoring the Work Allowance in Universal Credit to its original level would result in 340,000 fewer people in poverty in 2020/21. The majority of those benefitting would be lone parent families (150,000 fewer people in poverty) and couples with children (160,000 fewer). It would cost an estimated £3.4billion in that year.
  • Priority should be given to lone parents and couples with children as they are more likely to face working poverty. Restoring the work allowances for lone parents would cost £1.2billion in 2020/21 and for couples with children, £0.9bn.
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