The Government has admitted that families receiving in-work benefits will lose out from April next year – but suggested they could make up the shortfall themselves if they worked harder.

In what Labour has called Iain Duncan Smith’s “Christmas message”, the Department for Work and Pensions (DWP) proposed people “recoup the loss” from welfare reforms by doing three or four hours extra work every week.

The Work and Pensions Secretary has insisted people on universal credit will not be made worse off by in-work benefit changes announced in the summer budget.

Answering MPs’ questions earlier this month, Mr Duncan Smith said: “Those who are on universal credit at present will be fully supported through the flexible support fund, which will provide all the resources necessary to ensure that their situation remains exactly the same as it is today.”

Yet in a document released after Parliament broke up for the holidays, the DWP appeared to confirm that it expected working families to lose up to £1,600 a year.

Describing this as “an incentive for people to move into work”, the department told the Social Security Advisory Committee: “We also expect many claimants to respond to the changes to work allowances announced in the summer budget by actively seeking more work, and we will support them with this.

“For example, someone could recoup the loss from the Work Allowance changes by working 3-4 additional hours a week at the national living wage to which they are entitled.”

Duncan Smith on benefits

The estimate of three to four appears conservative, however. Working four hours a week at the Government’s new £7.20 “living wage” would earn someone £1,500 a year.

In a statement released by Labour, the shadow Work and Pensions Secretary Owen Smith said: “Working families set to lose thousands of pounds next year because of cuts to Universal Credit will be livid at the Tories’ offhand suggestion that they just work more hours

“It’s the measure of Iain Duncan Smith that he is trying to shift the blame for the cuts on to the victims. His Christmas message is work an extra 200 hours a year and you’ll be no worse off.

“Instead, the Tories should come back in the new year, show they have learned their lesson from the tax credits fiasco and issue a full U-turn on the cuts to Universal Credit.”

Speaking to the Guardian, a spokesman for the DWP said universal credit was “at the heart of our welfare revolution”.