Universal Credit is designed to strengthen incentives for parents to move into and progress in work and evidence shows that under Universal Credit claimants move into work significantly faster and spend more time looking for work than under the old system. Unlike Tax Credits, where people were often limited as to the number of hours they could work, Universal Credit entitlement is calculated according to income instead of the number of hours worked. Applying the single taper rate in this way ensures that support reduces gradually as a claimant’s earnings increase, giving people a clear incentive to increase their hours. Parents can also receive a work allowance which lets them keep more of the money that they earn.
In addition, Universal Credit now provides for 85% of childcare costs giving parents the opportunity to work and earn more, so they can support their families.