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New Credit rots soul, says Field

14 September 2012

AS MANY AS 100,000 of the poorest families in the country will lose up to £4000 a year of childcare when the Universal Credit is introduced, the Children's Society has warned.

The Universal Credit, which will be launched next year, will replace six tax credits - including child tax credits, working tax credits, and Jobseeker's Allowance. The Department for Work and Pensions says that the new credit "will help claimants and their families to become more independent", and will simplify the benefits system.

The Children's Society is calling for the Universal Credit to cover 80 per cent of the childcare costs of families on a low income rather than 70 per cent, as is planned. The charity says that, under current proposals, 100,000 families on low incomes "will lose £23 a week from help with childcare costs . . . leaving them having to pay up to seven-and-a-half times more than they do under the current system".

The chief executive of the Children's Society, Matthew Reed, said: "Childcare is key to making it possible for parents to stay in work. The Government is right to focus on work as a route out of poverty. But, by cutting vital support, it is jeopardising our children's chances of a better life."

Over the weekend, The World This Weekend on BBC Radio 4 reported that 70 organisations had raised concerns about the introduction of Universal Credit, in written evidence to the House of Commons' Work and Pensions Committee. The concerns included the introduction of monthly rather than fortnightly benefits payments, and whether a new IT system to administer the Universal Credit would be ready in time.

Writing in The Guardian on Tuesday, the Labour MP Frank Field said that there were "fundamental problems with Universal Credit". He described it as "the ultimate form of means-testing", which "encourages dependency".

Mr Field said: "It [the Universal Credit] obviously gets extra money to hard-working families who earn low wages, but in doing so it rots the soul. . . Under Universal Credit, people can still lose about 65p of every extra, hard-earned pound - 20p more than the highest rate of tax."

The Centre for Social Justice, which the Work and Pensions Secretary, Iain Duncan Smith, formerly chaired, issued a statement on Sunday supporting the Credit. Its managing director, Christian Guy, said that it would "ensure that work pays, and that people in employment keep more of their money."


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