The report was commissioned to probe whether Universal Credit, which combines six different benefits and tax credits into one simplified payment, will achieve its goal of making work pay. It suggested that people without children will generally have stronger incentives to work.

Moving into “mini jobs” of up to 10 hours a week would see families better off under the shake-up, but working beyond this threshold results in a slow climb towards a higher disposable income, it found. Families could end up “trapped” on inadequate funds to get by.
The system risks being undermined by high childcare costs combined with low wages and sharp cuts in Universal Credit once families earn above certain thresholds, the report, titled Does Universal Credit Enable Households To Reach A Minimum Income Standard? said.

Donald Hirsch, from the centre for research in social policy at Loughborough University and author of the report, said the rewards for working extra hours under Universal Credit can be “tiny”. He said: “Parents hit a ceiling where a lid is placed on the aspiration to work more hours for an adequate income, because the return is negligible.”