The response are provided on a individual capacity and in relation to Universal Credit as part of Childcare as a barrier to work.
The evidence provided is based in Harrow also known as London of Borough of Harrow. An unemployed single parent aged over 25 years old with 2 children both under 16 years old living in a rent house known as the household. The household under Universal Credit would receive the following in a year:
The Component of Universal Credit
| Payment for the Claim | Percentage of total claimed
|
Housing (2 bedroom)
| £12,979.20
| 53.19% |
Council Tax Benefit
| £1,501.26
| 6.15% |
Standard Allowance
| £3,813.84
| 15.63% |
Child Benefit (2 children)
| £6,105.00
| 25.02% |
Total amount
| £24,399.30
|
|
In Universal Credit, the payment is made on a monthly basis or monthly arrears to a single person or nominee of the household. In this household, the benefit payment will be paid to the single parent.
For this household to no longer receive any benefit payments also known as social security payments from the government. The household would require a gross salary of at least £53,700 per year in tax year 2018-19 using a Travel Card Zone 4 - 6 (costing £28.20 per week) from TfL to travel to work and childcare costing £13,296.48 per year.
The gross salary of £53,700 per year is made of the following components as shown below:
Name of Component | Cost or Amount
|
Gross Salary
| £53,700.00 |
Income Tax
| £9,836.40
|
Employee National Contribution
| £4,698.12
|
Net Pay
| £39,165.48
|
Employer National Contribution
| £6,248.09
|
When earning a gross salary of less than £53,700.00 per year, then the government continues to pay the benefits using a taper rate rule currently 60%.
Under the legacy system, this household would apply for a job with a gross salary of at least £53,700.00 per year and no other job below this gross salary.
A recommendation would be to investigate the following:
What type of jobs this household would be employed in and the availability of the job in the employment market?
If changing the tax threshold to incentives employment may be necessary?
Childcare providers under “approved childcare” in relation to the claim amount acting as the market price?
Can alternative Childcare provider models be used?
Could tax free Childcare be provided as a Child Voucher, this would have the effect of reducing the gross salary of at least £53,700.00 per year for a job?
Ensure work coaches are available to all single parent to cover the different issues involved in this benefit claimants