Timely OBR report gives an authoritative account of the huge challenges facing Universal Credit

Welcoming the Office for Budget Responsibility’s Welfare Trends Report published today (Thursday), which contains an authoritative account of the generosity and spending pressures associated with Universal Credit (UC) over the next five years, David Finch, Senior Economic Analyst at the Resolution Foundation, said:

“Universal Credit is a huge change to our welfare state with big implications for both family and public finances. As it finally starts to reach households across the country, today’s welcome report shines a timely and authoritative light on Britain’s once in a generation £60bn welfare reform.

“The report confirms that on average Universal Credit will be less generous than the system it replaces because of significant cuts to the new benefit. The government should revisit this given the living standards pressure on low and middle income households in the years ahead.

“The OBR notes that these cuts risk reducing the important employment gains Universal Credit aims to deliver. As Resolution Foundation research has previously shown, working families currently entitled to tax credits are likely to be the biggest losers from the move to a new system.

“The very welcome simplification of social security that Universal Credit represents should however see higher take-up. So, while being less generous on average, UC is forecast to save only £2.3bn a year once fully in place.

“With the government facing a number of critical decisions about the shape and delivery of Universal Credit as its roll-out ramps up this year, today’s report should spur a debate about how to get such a large welfare reform right. Now is the time for reforms to ensure it delivers the labour market and wider living standards boost it was originally designed to provide.”