Urgent calls have been made for a revamp of the Universal Credit (UC) system as research indicates some individuals are up to £2,800 per year worse off. The Resolution Foundation has highlighted the need for changes in the benefit system to address the challenges posed by an ageing and increasingly unwell population.

Since UC's inception, the number of claimants unable to work due to poor health has nearly doubled, now standing at 2.3 million. The landscape of both the benefits system and the nation has evolved considerably since UC was rolled out in 2013, the think tank's report notes. It points out that the unemployment rate has dropped from 8.5 per cent in 2011 to just 3.8 percent in 2023.

"Whoever wins the election will be governing a 'Universal Credit Britain', as the final stage of what has been the biggest benefit reform in a generation is due to end with a system covering seven million families by 2029," the report states. Recent Government reforms to UC aim to motivate those with health issues to enter the workforce.

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The next government, regardless of which party takes power, must expand upon these initiatives, while acknowledging that UC alone cannot resolve the increasing incidence of sickness, the Resolution Foundation suggests, with its focus on boosting living standards for low to middle-income earners. By 2028, UC entitlements are projected to hit around £86 billion annually, which is £14 billion less than if the 2013/14 benefits system had been maintained, according to the foundation's analysis, reports Wales Online.

The report revealed that seven out of 10 (71 per cent) families eligible for either Universal Credit (UC) or legacy benefits were financially worse off in real terms on UC in 2024/25 than they would have been under the legacy system in 2013/14. However, this was primarily due to reductions in overall levels of working-age support, rather than the design of UC itself, according to the foundation.

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The study suggested that the most significant beneficiaries from the transition to UC were working families living in rented accommodation. A single parent renting and working 30 hours per week on the national living wage would be nearly £3,800 per year better off in 2024/25 than if they were on the old system, the foundation estimated.

Among the 2.7 million families in the private rental sector eligible for UC, the average gain compared to the old system was £1,200. However, the report also highlighted that the simplification of disability premiums meant that claimants with disabilities who were not working were likely to be worse off under UC.

A single individual with a long-term disability preventing them from working could end up being £2,800 per year worse off, the foundation stated. "Universal Credit also shifted the make-up of support for people with ill health and disability, with the result that disabled people are among the biggest losers, on average, from the reform," the report said.

"Single people with a disability that prevents them from working ie those who would previously have been in the Employment and Support Allowance (ESA) support group and in receipt of Personal Independence Payment (Pip) are around £2,800 per year worse off on Universal Credit in 2024/25 than on legacy benefits once any transitional protection has been eroded or lost."

"This is because the element of Universal Credit covering ill health is set at a lower rate than the combination of ill-health support and disability premiums in ESA."

Alex Clegg, economist at the Resolution Foundation, declared: "Whoever wins the next election will be governing a 'Universal Credit Britain', with seven million families eventually receiving the new benefit. It is vital that they understand both the system they will inherit and the population that relies on its support. A lot has changed since Universal Credit was first introduced back in 2013. The working-age benefit system is less generous, with entitlement down by £14 billion. And while the 2010s' problem of high unemployment have faded, Britain faces new challenges from an older and sicker population."

"Compared to the old system, Universal Credit offers greater support for renters and stronger incentives to enter work. But its original design did not anticipate there being over two million claimants with poor health or disabilities. Alongside efforts from the NHS, education, and labour market policy to address the drivers of ill health, UC will need to change to tackle Britain's new challenge of long-term sickness."

A spokesperson for the Department for Work and Pensions commented: "Universal Credit has proven itself as a modern benefits system fit for the future, providing a vital safety net to millions while helping people move into work faster. We boosted benefits by 6.7 percent this month, worth £470 for 5.5 million households on Universal Credit.

"Work is the best path to long-term financial security and through Universal Credit, our £2.5 billion Back to Work Plan will help over a million people including those with long-term health conditions find, stay and succeed in work."