A salary of around £71,000 a year is now needed to match the benefits income for bigger families, a think-tank has warned.
Calculations from the Centre for Social Justice have laid bare the impact of Labour’s decision to axe the two-child cap.
Rachel Reeves has been trumpeting the £3billion a year move in the Budget, insisting it will slash child poverty.
A family with one adult full-time and one part-time worker would take home roughly £28,000 after tax, according to the estimates.
But that is £18,000 less than the welfare income now available to an equivalent three-child family outside work on combined benefits.
The CSJ – chaired by Tory former Work and Pensions Secretary Iain Duncan Smith – said: ‘Matching that level of support through earnings alone would require a pre-tax salary of around £71,000.’
A family with one adult full-time and one part-time worker would take home roughly £28,000 after tax, according to the estimates
A parent with four children on combined benefits would be expected to receive roughly £43,000 per year
Rachel Reeves has been trumpeting the £3billion a year move in the Budget, insisting it will slash child poverty
The split for single parents is even starker, the think-tank’s report said.
A parent with four children on combined benefits would be expected to receive roughly £43,000 per year.
That is some £22,000 more than the take-home pay from a full-time job on £20,600.
‘These gaps demonstrate how the incentives to work, or progress within work, have been further eroded,’ the CSJ said.
The think-tank said an out-of-work family with three children receiving the average Universal Credit housing element, health benefits and PIP was projected to take home around £46,000 a year by 2026-27.
‘For the smaller number of families with five children, that figure rises to £55,000,’ the report said.
‘These households are insulated from the overall benefit cap because two in five families previously subject to the limit are in receipt of health-related payments (translating to an estimated 244,000 households).
‘The result is a system that delivers higher living-standard guarantees outside work than inside it for large numbers of families.’
