IPPR: Reform could be undermined by other cuts
Nick Pearce, director of the Institute for Public Policy Research (IPPR), comments on the government’s welfare announcements:
“The universal credit is a welcome long-term reform. The principle of making work pay is the right one but it will be critically undermined by impact of previously announced cuts to tax credits and rising costs for childcare and transport.
“You can only guarantee that people will always be better off in work if their additional earnings are not wiped out by the costs of childcare and travel to work. Yet bus and rail fares are set for steep rises in the coming years, while the government has not worked out whether the universal credit can be used to cover childcare fees.
“Meanwhile, the amount of support that working families can claim for childcare through the tax credit system is being cut from 80% of total costs to 70%. Couples will also have to work an extra eight hours a week between them to be eligible for working tax credits but because this might not be possible in the current economic climate, they could see their entitlement cut, making work less worthwhile.
“Welfare reform must involve widening access to free or affordable childcare if we want to make work pay.”
