Benefit changes 'will leave 2.6 million families £1,600 a year worse off'

The new Universal Credit system will mean a less generous benefit entitlement for working families, a respected economic think tank has said.

An estimated 2.6 million working families can be expected to be an average £1,600 a year worse off under UC than they would have been under the existing system, said the Institute for Fiscal Studies.

Transitional protections mean that no existing claimants will lose out in cash terms when the new system comes in, but new claimants and those whose circumstances change will lose out in the long run, the IFS said.

Despite Chancellor George Osborne's decision in Wednesday's Autumn Statement to scrap cuts to tax credits proposed for next April, the IFS said that his plans still envisage reducing non-pension benefits to their lowest level as a share of national income for 30 years.

Research economist Andrew Hood said: "No existing claimants will see a cash fall in their entitlements.

"Previously, in April 2016, some people were going to see less money than they previously had. That's no longer going to be the case. Even when existing claimants are rolled on to universal credit their entitlements are protected in cash terms.

"The point we are making is the system is still less generous in the long run, so new claimants and claimants whose circumstances change and lose that transitional protection, will lose out in the long run."