Teachers and nurses among workers ‘worse off than five years ago’
16 August 2017
Teachers, nurses and other workers on low and middle wages have seen their incomes fall by thousands of pounds in recent years, new analysis shows.
Research by the House of Commons Library found workers in the public and private sector have been hit by stagnating wages and a reduction in in-work support.
Cuts to universal credit are also falling heaviest on women and ethnic minorities, according to Government documents obtained by shadow work and pensions secretary Debbie Abrahams.
Ms Abrahams is now calling for the roll out of universal credit to be paused, blaming the new system for part of the decline in people's earnings.
The Government said universal credit offered more support to people in work and it had introduced measures such as the national living wage.
But Labour's calls to overhaul universal credit were backed by charity Citizens Advice, which said it had helped thousands of people with debt issues in relation to the benefit.
Ms Abrahams said: "It is shocking that most people on low and middle incomes are no better off than they were five years ago, and in some cases they are worse off.
"The Government's cuts to in-work support of both tax credits and universal credit are having a dramatic effect on people's lives, on top of stagnating wages and rising prices.
"It's no wonder we are seeing record levels of in-work poverty, now standing at a shocking 7.4 million people.
"These analyses make clear that the Government's abject failure on living standards will get dramatically worse if universal credit is rolled out in its current form."
The House of Commons Library analysis compared different types of households and income groups working full time, taking into account changes such as the new national living wage.
It showed single parents with dependent children being particularly badly affected, getting up to £3,100 a year less in real terms on universal credit compared to tax credits.
Nurses and teachers were also hit by the combination of stagnating wages and cuts to the welfare system.
A single parent of two working full-time as a teacher who is a new claimant to universal credit will be around £3,700 a year worse off in 2018/19 compared to 2011/12.
A single parent of two working in the NHS on average full-time earnings for the public sector who is a new tax credit claimant will be more than £2,000 a year worse off in real-terms in 2018/19, compared with 2011/12.
Of 14 different scenarios that were analysed, 12 would receive less in real terms as new claimants on universal credit in 2018/19, compared with the old tax credits system in 2011/12.
All 12 would also receive less under universal credit, compared with tax credits.
Equality analysis, published in response to to a freedom of information request by Labour, shows that households with a woman or member of an ethnic minority are more likely to be adversely affected by cuts to universal credit work allowances.
Universal credit is aimed at bringing a number of welfare payments together into one social security payment, making the system easier to use.
It has been subject to a series of changes since 2013, such as cuts to work allowances and a four-year freeze on rates paid to claimants.
Citizens Advice says it has supported more than 30,000 people with universal credit issues in the past year, with a quarter also needing help with debt issues.
It highlighted the issue of people waiting more than the maximum six weeks for their first payment, which forced many to borrow money to meet essential costs.
Chief executive Gillian Guy said: “We support the aim of universal credit to simplify the benefits system, but for the Government to meet this, it is important that issues around delays to the first payment and the support available via the helpline are addressed.
“We want the plans to accelerate the roll out of full service universal credit to be paused, so that work can be done to reduce to the wait claimants face for their initial payment and make it easier for them to access the right support with their application.”
A Government spokeswoman said: “We are committed to helping people improve their lives and raise their incomes.
“Universal credit (UC) does that by providing additional tailored support not available under the old benefit system, including more help for those in work so they can eventually stop claiming benefits altogether, and under UC people are moving into work faster and staying in work longer than under the previous system.
“Earlier this year, we made the rate at which universal credit is withdrawn more generous so people keep more of what they earn as they move into work, which is set to help around three million families across the country.
“We are also raising people’s take-home pay by introducing the national living wage worth £1,400 extra a year, and cutting taxes for 31 million people.”