That’s a tough decision, let’s face it, but surely you won’t be stuck on universal credit unless you find work, right?
The answer, it turns out, may not be so simple after all.
The most commonly available information we have is that many claimants to universal credit (a monthly payment paid to all households) find jobs or start training that enable them to move from their job without interruption.
This could either mean that claimants are able to receive better prices, or it could mean that claimants are paid less on average.
For example, according to the Treasury, “most claimants to universal credit are able to improve their average weekly earnings by as much as £4 compared to those of more experienced claimants”.
The situation changes for claimants who can’t find jobs or are unable to start training, so the difference between the two may be as much as £19 a fortnight on average, according to the Department of Work and Pensions.
What is average weekly earnings?
The typical weekly earnings of a worker in the private sector is currently set at £744 a week. But the average weekly earnings after tax (not including the first £7.63 from tax credits) was £830 last year.
The average for full-time workers in 2016 was £637 per week.
Universal credit gives the claimant a wage rise, with the amount calculated based on the claimant’s personal circumstances.
So to make the average earnings up to £835, the claimant must earn 1% more, or £9.33, per week. This gives each worker a £14.38 real basic pay rise.
If the claimant has an extra £9.33 in her account in the bank or savings, they can increase that up to the average £7.44 of basic pay rise or 0.64% real basic pay rise.
The minimum hourly rate for a self-employed person in the private sector currently is £9.50, and it could go up to £10 if they put down a large deposit on their business premises.
The changes to the rules have therefore also enabled claimants to save more money.
But how does universal credit compare with the pay and living costs of the self-employed person?
The average gross wage in the private sector is £19,850 but a self-employed person, on average, only receives £9,200, according to the ONS
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