Coalition reform plans will fail to make work pay

GOVERNMENT proposals to reform the welfare system will fail to “make work pay” for many parents, a think tank report will claim today.

Despite the coalition’s pledge that people will be “better off for each hour they work” under the new universal credit scheme, parents throughout the UK will face negligible incentives to work, the Resolution Foundation said.

A single parent on the minimum wage would take home just £7.50 a week more if they decided to work for two days a week, instead of one day.

“Further increases in childcare costs risk driving parents – especially mothers -- on low-to-middle incomes out of full time work,” said Gavin Kelly of the Resolution Foundation, which co-authored the report with campaigning charity Gingerbread. “Doing more than part-time work just wouldn’t make you better off,” Kelly said.

Parents working fewer than 16 hours a week will be subsidised for childcare costs under the proposals.

“But as the overall budget for childcare support within the credit is fixed, other working parents will lose out,” the report said.

Iain Duncan Smith, the secretary of state for work and pensions, will hold consultations over the Welfare Reform Bill this week.