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Budget 2021: what does it mean for low-income families?

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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.

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)

Weekly income before new announcements

£77

£278

£433

£333

£489

Weekly gain from taper rate and work allowance

£0

£8

£19

£19

£31

 

 

 

 

 

 

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

2) overall cost of living increase

-£6

-£8

-£13

-£8

-£13

3) increase in National Insurance and impact of inflation on earnings

£0

-£1

-£3

-£3

-£4

 

 

 

 

 

 

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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