Budget 2021: what does it mean for low-income families?
New analysis by the independent Joseph Rowntree Foundation (@jrf_uk) reveals that the rising cost of living wipes out much of the financial gain some families will receive from the Universal Credit changes announced today.
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Weekly incomes and Costs for 2022/23 |
Family 1: single adult, no children, not working |
Family 2: single parent, with one young child (assume age 5), part-time 16 hours per week |
Family 3: couple with two young children (assume 7 and 5). One FT worker |
Family 4: single parent, with one young child (assume age 5), full-time 35 hours per week |
Family 5: Couple with two young children (assume 7 and 5). 1 FT worker (35 hours), 1 PT worker (16 hours) |
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Weekly income before new announcements |
£77 |
£278 |
£433 |
£333 |
£489 |
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Weekly gain from taper rate and work allowance |
£0 |
£8 |
£19 |
£19 |
£31 |
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Total loss from higher cost of living due to… |
-£13 |
-£16 |
-£23 |
-£18 |
-£24 |
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1) increase in energy prices |
-£7 |
-£7 |
-£7 |
-£7 |
-£7 |
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2) overall cost of living increase |
-£6 |
-£8 |
-£13 |
-£8 |
-£13 |
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3) increase in National Insurance and impact of inflation on earnings |
£0 |
-£1 |
-£3 |
-£3 |
-£4 |
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Overall weekly gain or loss after measures and cost of living |
-£13 |
-£8 |
-£4 |
£1 |
£7 |
Note all five families lost £20-a-week in October 2021, due to the cut in the Universal Credit Standard Allowance, so all are worse-off than they would have been in September 2021. All workers are assumed to be paid at the National Living Wage rate, so benefit from its increase.
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