Disabled people can be more than £300 a month worse off under Universal Credit

25 October 2018

Universal Credit could leave some single disabled people more than £300 a month worse off compared to the previous system, research from Citizens Advice reveals.

In its new report, Universal Credit for Single Disabled People, Citizens Advice reveals a significant drop in financial support for single disabled people in a range of circumstances.

This includes losses that can be more than £300 a month for working disabled people because of flaws in the design of the new benefit. The Work Allowance is meant to improve work incentives for disabled people in Universal Credit.

However, in practice, the Work Allowance can only be accessed through the Work Capability Assessment, which gives benefits awards to people unable to work, rather than for disabled people who can work. This creates the situation where a worker must be assessed as not fit for work to receive targeted in-work support.

The report shows disabled people will lose out in many ways:

Working disabled people on Universal Credit could be more than £300 per month worse off because they struggle to access the Work Allowance while in work.
Working disabled people who do get the Work Allowance could be more than £200 per month worse off due to weaker support from the Work Allowance when compared to support for disabled workers in Tax Credits.
Disabled people who can only do limited work have their benefit reduced after working just 6 hours a week at the minimum wage if they have housing costs, rather than 16 hours a week in the previous system. This means somebody working 12 hours a week can be over £100 a month worse off.
People without a carer and unable to work who make a new Universal Credit claim can be £180 a month worse off because the Severe Disability Premium was removed.

Universal Credit is the government’s flagship welfare programme that rolls 6 legacy benefits - such as Tax Credits and Employment and Support Allowance - into one monthly payment.

Citizens Advice has looked extensively at the effects of the new system including recent reports on problems making a claim and work incentives.

This latest report from the charity finds that Universal Credit has brought some improvements by simplifying the benefits system and removing “cliff edges”, where some people lose large chunks of income if they work just a few more hours.

However, Citizens Advice says the government - which wants 1 million more disabled people in work by 2027 - must increase financial help and improve work incentives for disabled people and those with health conditions.

It is calling on the government to make changes to the design of Universal Credit to make sure disabled people aren’t penalised when they claim the new benefit.

Citizens Advice identifies four things the government should consider improving in Universal Credit for disabled people and those with health conditions:

Ensure working people receive targeted in-work financial support if they are disabled or have a health condition.
Ensure disabled people with a Limited Capability for Work are able to trial part-time work without facing a significant penalty in their benefits.
Review the removal of the Limited Capability for Work element, worth £29 a week, and the introduction of a personal support package.
Introduce targeted financial support through a self-care element for disabled people who live alone without an adult carer.

Gillian Guy, Chief Executive of Citizens Advice, said:

“Some disabled people will be unfairly disadvantaged under Universal Credit.

“Working disabled people need to prove they are unfit to work to get support meant for them. This goes against the government’s aim to support a million disabled people into work.

“Even when disabled people do get the support meant for them under Universal Credit, whether they are in work or not, they can be hundreds of pounds worse off a month than the previous system. This is money people desperately need to cover their bills.

“The government needs to address this and increase the financial support disabled people can receive under Universal Credit.”

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Notes to editors

1. Citizens Advice is made up of the national charity Citizens Advice; the network of independent local Citizens Advice charities across England and Wales; the Citizens Advice consumer service; and the Witness Service.
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