Universal Credit threat to equality

In all the fuss about so-called welfare reform there has been very little attention paid to the impact of the changes on equality. Yet the UK Government’s changes to social security benefits could turn the clock back by 30 years, especially once Universal Credit is in place.

Universal Credit will replace the majority of benefits paid to people because they are out of work or on a low income, whether they are in or out of work. One of the key aims of Universal Credit is to incentivise work, so that a claimant is always better off taking a job, no matter how few the hours or how poorly paid, than not working.

But as with many benefits, the devil is in the detail. And hidden in the small print about Universal Credit is the bombshell that the incentive applies only to ‘first earners’. As the DWP’s Equality Impact Assessment points out:

“incentives for first earners have been given priority over second earners … The aim of Universal Credit is to ensure that as many households as possible have at least someone in work and that work will pay for that household.”

By incentivising first earners, second earners are actively dis-incentivised. The Resolution Foundation recently reported that a second earner in a family working 16 hours a week on the minimum wage would, on Universal Credit, take home £17 a week after childcare costs – around £1 an hour – compared with £46 a week under the current system.

Of course the Department for Work and Pensions doesn’t prescribe who is the first or second earner in a household, and it be entirely possible that the first earner is a woman and that her male partner stays at home and cares for the children and does the cleaning. But it is unlikely that traditional division of labour between women and men will suddenly change – the reality is that it will simply not be worthwhile for thousands of women in low-income to take a job while they have children.

DWP’s Equality Impact Assessment presents the prioritization of first earners as a means to ‘increase options available for families to strike their preferred work/life balance’. I see it as a kick in the teeth for thousands of women in low-income households who find, through no fault of their own, that they are paying a penalty on their earnings that is surely unprecedented in the tax system.

Victoria Winckler is Director of the Bevan Foundation. This post is based on a presentation to a conference ‘Equality 2020’ on 11^th September 2012. Full text of Victoria’s presentation is available here.