MPs warn Universal Credit system could drive families into debt

A report by the Work and Pensions select committee, published yesterday, warned that moving to an online claims system and a single monthly payment could be difficult for some claimants to manage and push them into debt.

MPs also warned that ministers will need to monitor whether the Universal Credit incentivises parents to return to work, given that there will be less financial support available for childcare and childcare costs remain high.

The report said, 'We welcome the extension of help with the costs of childcare for Universal Credit claimants so that it is available to parents who work fewer than 16 hours a week. However, we note that the effective level of support will be less for some families who are currently benefiting from disregards under Housing Benefit and Council Tax Benefit. The costs of childcare are a key factor in achieving real financial benefits from returning to work and the Government will need to monitor the extent to which the childcare element of Universal Credit is effective in promoting work incentives, particularly in the context of the high cost of childcare in the UK.'