Hundreds of thousands of families trying to save for the future will be left with little or no financial support under the Government’s proposed overhaul of welfare benefits, according to the Social Market Foundation.
The think tank has released figures which show that around 400,000 families with children – currently receiving tax credits – will lose their entire eligibility for financial support under the Universal Credit, details of which are to be outlined today.
New rules for the Universal Credit mean that families with £16,000 or more in savings are disqualified, says the SMF. At least a further 200,000 families with savings of between £6,000 and £16,000 will lose some of their entitlement under the new regime, it claims.
“The Universal Credit will punish working families trying to save for the future, such as those trying get a foot on the property ladder,” said Ian Mulheirn, Director of the SMF.
The SMF’s analysis of the savings penalty shows that a family with two children and a combined income of £25,000 per year could lose out to the tune of around £50 per week depending on the ultimate design of the Universal Credit. In addition, many thousands more working families receiving support for childcare could be disqualified from eligibility.
Ian Mulheirn continued: “These reforms will save the Government a lot of money, but they send all the wrong signals to working families. The Government should reassess these punitive proposals and support working families on low incomes seeking to save for the future.”