Universal Credit and single working parents.

WantToBeSE

I am just wondering if anyone knows much about Universal Credit?

My main question is: there has been quite a lot of reports in the press, saying that Universal Credit will hit single working parents the hardest. Can someone explain why?
Having read some of the literature about UC (not much, hence why i am asking this question), it seems that everyone will be better off working. So why is it being said that single working parents will be hit the hardest?

HappyMJ

It's to do with childcare. No childcare costs and single parents will be better off by working around school hours and having friends and family help out.

WantToBeSE

HappyMJ wrote: »

It's to do with childcare. No childcare costs and single parents will be better off by working around school hours and having friends and family help out.

Thanks MJ. I am guessing that applies more to single working parents with pre-school age children then.
But, wont they get 70% childcare paid still? I guess it'll be a big problem if they have multiple children, as 30% can still be a lot...but wont they get extra £ per child anyway?

Sorry for all the Qs, i am just trying to work it out.

HappyMJ

WantToBeSE wrote: »

Thanks MJ. I am guessing that applies more to single working parents with pre-school age children then.
But, wont they get 70% childcare paid still? I guess it'll be a big problem if they have multiple children, as 30% can still be a lot...but wont they get extra £ per child anyway?

Sorry for all the Qs, i am just trying to work it out.

Yes and no...yes the benefit is increased by 70% of the childcare expense but the benefit amount is reduced by 65 pence in the pound that they earn...

So...either work part time and earn £300 and have no childcare costs or increase hours and earn £400 a week and have £100 of childcare expenses each week. The tax credits would increase by £70 a week...but due to earning over the minimum amount would be reduced by £45.50 a week....so as well as paying the £30 top up a week and £12 NI and £20 tax and losing £45.50 in tax credits they are actually £7.50 a week worse off by increasing hours to earn an extra £100 a week. Very confusing...

WantToBeSE

HappyMJ wrote: »

Yes and no...yes the benefit is increased by 70% of the childcare expense but the benefit amount is reduced by 65 pence in the pound that they earn...

So...either work part time and earn £300 and have no childcare costs or increase hours and earn £400 a week and have £100 of childcare expenses each week. The tax credits would increase by £70 a week...but due to earning over the minimum amount would be reduced by £45.50 a week....so as well as paying the £30 top up a week and £12 NI and £20 tax and losing £45.50 in tax credits they are actually £7.50 a week worse off by increasing hours to earn an extra £100 a week. Very confusing...

Wow, that IS confusing! I guess it'll be a case of waiting to see what happens, preparing as much as possible, and thanking my lucky stars that my children are a bit older (13 and 8).

zagfles

It will depend on the earnings/childcare ratio. If as in the example above, increasing earnings by £100 increases childcare costs by £100, then it's not worth it - but then, why should it be? If it costs you £100 to earn £100 why bother? And why should it be subsidised?

If, as is more common, marginal earnings are greater than marginal childcare by a reasonable amount, at least 30%, then it will be better to work more than the "work allowance" (disregard).

zagfles

WantToBeSE wrote: »

I am just wondering if anyone knows much about Universal Credit?

My main question is: there has been quite a lot of reports in the press, saying that Universal Credit will hit single working parents the hardest. Can someone explain why?
Having read some of the literature about UC (not much, hence why i am asking this question), it seems that everyone will be better off working. So why is it being said that single working parents will be hit the hardest?

There's been a lot of biased rubbish in the press, coming up with worst-case scenarios and presenting them as the norm. Some people with childcare may a little worse off, but it depends on exact circumstances, some with childcare will be better off. Most working parents on low hours/low pay will be better off.

WantToBeSE

Thanks Zagfles-i don't think the childcare issue will effect me too much then, as i only have the 1 child in childcare (other one is older so wont need it), and it'll only be after school.

I am wondering if (unlike the current tax credit system) single working parents will be better off if they work full time, as opposed to part-time?

zagfles

WantToBeSE wrote: »

Thanks Zagfles-i don't think the childcare issue will effect me too much then, as i only have the 1 child in childcare (other one is older so wont need it), and it'll only be after school.

I am wondering if (unlike the current tax credit system) single working parents will be better off if they work full time, as opposed to part-time?

It will depend on exact circumstances eg earnings, childcare, age of children.