Here is a link to the full ft.com story if you are interested. But the key points of this morning’s report by the Institute of Fiscal Studies – on the impact of IDS’s universal credit – is:
* Well over a million families look set to lose out in the long run. But more families – about 2.5m – are likely to gain from the reform.
* The report says the reform could simplify the complicated overlaps between benefits and tax credits. It should save on administration, fraud and error, and make life easier for claimants.
* Single adults reliant on benefits, and very low paid primary earners in a couple, will see stronger incentives to work, even for a few hours a week. But the changes will weaken work incentives for potential second earners in a couple, and reduce incentives for middle earners to earn more.
* The new system will be introduced between October 2013 and 2017. Eventually 2.5m families are likely to gain, about 1.4m will lose, and some 2.5m will see no change.
* The long run cost is likely to be about £1.7bn in 2014-15 prices.
* Couples with children will gain more than those without. Lone parents, on average, will lose in the long run.
Another interesting twist involves the impact on marginal tax rates.
The reforms will reduce the numbers who lose more than 70 per cent of their income as they move in to work through a combination of taxes on earnings and benefit withdrawals. Their numbers will fall by 1.1m. But the numbers who lose more than 60 per cent will rise by 350,000.
Jim Pickard
Kiran Stacey