Inclusion was commissioned by London Councils to assess the likely impact of Universal Credit in London for a typical group of households.
The project was carried out in partnership with Ferret Information Systems to model income levels under Universal Credit and to calculate the ‘spending power’ for these families, both in London and elsewhere.
Compared with the current system, most London households will be left with less spending power under Universal Credit, with single parents and families with two or more children hardest hit. The only exception is parents who work for less than 16 hours a week.
For some income groups, adults will only be marginally better off in work rather than out of work under Universal Credit, as childcare costs are so high.
The Universal Credit calculation needs to recognise that there are different ‘childcare markets’ across the country. The welfare reforms should also include provision for holiday and wrap around child care.
The government should consider the option of raising the overall benefit cap for London or raising the housing element of the cap for London, which is currently proposed to be a total of £500 a week.