UNIVERSAL credit (UC) will see 600,000 single parents worse off than under the previous benefit system, the Resolution Foundation reveals today.

Lone parents, 90 per cent of whom are women, lose out the most when moving onto the controversial system, despite £1.7 billion extra investment from the Budget.

Analysis by the think tank found that although the investment in UC work allowances will increase single parents’ income by up to £630 a year, they were still more likely to be worse off under the Tories’ system.

A Resolution Foundation spokesperson said: “UC creates strong incentives for workers to match their earnings to their work allowance, but relatively weak incentives to work beyond them.

“That’s because they’re able to keep 100 per cent of each additional £1 earned up to their work allowance, while every extra £1 earned after that leads to a 63p reduction in benefit income.”

The report called for increases in work allowances for single parents who are at risk of losing out, and for the introduction of a new second earner work allowance to encourage more people, particularly women, to work.

Changes by Chancellor Philip Hammond mean the number of working families losing out from the controversial welfare reform will mildly drop from 3.2 million to three million, the study found.

The reform is set to be more expensive than the system it replaces for the first time since 2015, according to the study, but more reform is needed to prevent people becoming stuck in low-paid, short-hours work, the Resolution Foundation warned.

Resolution Foundation’s Laura Gardiner said the extra investment was welcome, but added that if the government wanted to make UC “fit for the challenge” of tackling 21st-century poverty in Britain, the government's “top priority” should be making it work better for single parents.

“The government should now prioritise reforming work allowances so that they do more to incentivise higher earnings for single parents, and encourage more second earners into work,” she said.

“This would make UC more female-friendly, and a better vehicle for driving down poverty.”

Shadow chancellor John McDonnell has said the Labour Party would scrap UC when it comes into power.