Publication - Research and analysis

Impact of withdrawing emergency benefit measures

Published: 20 Nov 2020

This report estimates the impacts of reversing the £20 per-week uplift to Universal Credit and Working Tax Credits and reinstating the Minimum Income Floor on Scottish households in 2021-22.

Contents
Impact of withdrawing emergency benefit measures
Annex C: Worked example of impacts on families with and without children

Annex C: Worked example of impacts on families with and without children

Table 5 illustrates the impact of removing the £20 per-week uplift on the income of two hypothetical families: a single person without children and a couple with two children. In this example, the single person and the two adults in the couple each earn £150 per week and receive Universal Credit. All amounts have been converted into weekly terms.

As the single person starts with a lower standard allowance than the couple (£94.59 versus £137.09) the removal of the £20 uplift represents a larger percentage decrease in their standard allowance (21%) compared to that of the couple (15%). This difference is magnified when we consider their maximum entitlements, since the couple is additionally entitled to a child element and a higher housing element.[1] The couple also receives a work allowance which the single person does not, so although they earn twice as much as the single person their UC award is not reduced by twice as much.[2]

By the time we consider their final UC payments, the removal of the uplift represents a 91% reduction in the single person’s payment, compared to 16% for the couple. Finally, when we add earnings to their UC payments, the net effect of removing the uplift is reduce the single person’s total income by 12%, compared to 5% for the couple.

Table 5: Impact of removing £20 uplift on single person without children and couple with two children, weekly, £s

 

Single person without children

Couple with two children

With uplift

Without uplift

Change

With uplift

Without uplift

Change

Standard allowance

94.59

74.59

-21%

137.09

117.09

-15%

Child elements

0.00

0.00

 

108.84

108.84

 

Housing element

21.80

21.80

 

27.78

27.78

 

Maximum entitlement

116.39

96.39

-17%

273.71

253.71

-7%

Earnings

150.00

150.00

 

300.00

300.00

 

Work allowance

0.00

0.00

 

67.38

67.38

 

Reduction

94.50

94.50

 

146.55

146.55

 

UC payment

21.89

1.89

-91%

127.16

107.16

-16%

Total income

171.89

151.89

-12%

427.16

407.16

-5%

[1] Maximum housing elements (i.e. Local Housing Allowances) vary by local authority. In this example they are based on the unweighted average LHA across local authorities in Scotland. We assume that the couple claims for a two-bedroom property while the single person claims for one bedroom.

[2] The taper rate is 63%, meaning that a claimant’s UC payment is reduced by 63p for every pound they earn above their work allowance.