Government faces growing demand to rethink means-tested benefits

The government is being urged to carry out an urgent review of means-tested financial support that goes beyond universal credit.  

In a recent report, researchers from the Institute for Policy Research (IPR) at the University of Bath called for the expansion of free school meals, help with utility bills, reductions in council tax, school uniform grants and healthy food vouchers for new mums.  

What is universal credit?  

Universal credit is a payment for working aged people who are on a low income or out of work. It includes support for children, childcare and housing, as well as financial support for people living with disabilities who are too ill to work, or are caring for others.  

Does universal credit truly make work pay?  

The IPR report explores how universal credit relates with earnings and ‘passported’ benefits. Passported benefits are benefits that automatically qualify recipients of universal credit for additional support, such as free NHS prescriptions, dental treatment and eye tests.  

Earning more can leave low-income workers financially worse off, as they can no longer claim benefits, including passporting benefits. The report therefore challenges the idea that universal credit truly ‘makes work pay’.  

Dr Marsha Wood, a research associate with the IPR at the University of Bath, said it’s “frustrating to realise that the extra money in their pockets doesn’t outweigh the benefits they lose, and this can lead to significant financial struggles.  

“These ‘cliff-edges’ discourage individuals from working longer hours or striving for higher pay.”  

In its manifesto before the general election, Labour said it was committed to reviewing universal credit so that it makes work pay and tackles poverty. The IPR researchers are urging the government to prioritise delivering on this promise.  

A new child poverty strategy  

Following Labour’s general election win in July, Keir Starmer announced a new child poverty strategy, promising to leave “no stone unturned” in tackling child poverty. The strategy involves experts from across government working together on how best to support more than four million children living in poverty.  

But the new report claims that child poverty would be alleviated if working families had access to benefits and the means-tested support that is automatically given to claimants.  

What passporting benefits can you get if you claim universal credit?  

If you receive universal credit, you’re entitled to a number of other benefits. These include:  

• free prescriptions 

• free dental treatment  

• discounted travel 

• free school meals 

• held with childcare costs 

• free or discounted gym membership 

• reduced water bills 

• free or low-cost internet access 

• energy bill support 

• free or discounted educational courses 

You can read more about each different benefit in our blog on the freebies you get if you claim universal credit.  

How your wages affect your universal credit payments 

If you or your partner are working, the amount of universal credit you get will depend on how much you earn. If your wages go up, your universal credit payment will be reduced. For every £1 you earn from working, your universal credit payment goes down by 55p. If your wages go down or you stop working, your payments will increase.  

Do you need money help? 

If you’re struggling with the cost of living, you can use our benefits calculator to check you’re getting all the benefits you’re entitled to or get in touch and we’ll check for you.   

More details about welfare changes and spending will be announced by the chancellor in the government’s autumn statement on 31 October. We’ll keep you updated on all the biggest announcements.