More than three million families UK will be better off thanks to cuts to universal credits announced in Wednesday's Autumn Statement.
The cuts will see the Universal Credit 'taper rate' - how quickly the benefit is withdrawn as recipients earn more - reduced from 65% to 63% - this means claimants will be able to hold on to an additional 2p for every pound they earn in employment.
In other words, people who progress in work will be able to keep more of their income.
The changes will soften the impact of harsh welfare cuts introduced by Hammond's predecessor George Osborne.
Osborne previously cut the "work allowance" threshold at which Universal Credit begins from the initial £222 per month for a couple with children and £263 for a single parent to £192, in an attempt to save £3 billion in welfare payments.
However, Hammond's u-turn will support Prime Minister Theresa May's pledge to help 'Just about Managing' families - better known as the Jams.
In his speech, Hammond also gave more than a million UK workers a pay rise after announcing a rise in the minimum wage from £7.20 an hour to £7.50 in April 2017.
The Treasury said Hammond's package was designed to "improve the living standards of ordinary working class people and their families", in line with May's pledge at the Conservative conference last month.
Universal Credit is a welfare simplification scheme pioneered by Iain Duncan Smith and former Chancellor George Osborne which rolls six benefits into one - it's currently being rolled out across Job Centres UK-wide. The new all-in-one benefit combines:
- Income-based Jobseeker’s Allowance
- Income-related Employment and Support Allowance
- Income Support
- Child Tax Credit
- Working Tax Credit
- Housing Benefit
But, is it too little too late for families?
Theresa May had ordered Hammond to help those Just About Managing - six million people with net incomes of between £12,000 and £34,000 a year.
But Labour’s Shadow Chancellor John McDonnell said: “If all the Chancellor is offering is a 2% change in the taper rate, then it will be too little, too late for those working families who have had to bear the brunt of six wasted years of failed Tory economic policies.
“Despite all their rhetoric last month, and before the ink is even dry on the Autumn Statement, it looks like it will be jam tomorrow for working people under Theresa May and Philip Hammond.”
Hannah Maundrell, Editor in Chief of Money.co.uk added; "Backtracking on benefit reforms should help many of the households that were hit by the previous Chancellor’s austerity drive. It won’t be a silver bullet that saves the day though, many households won’t see a dramatic change.
Lady Stroud, an ex-adviser to Duncan Smith key to the government’s universal credit plans, said that the government had to act in this area to reach its target group.
"There are two options – you can put money into the work allowances or taper rate – both would be effective at getting money to the just about managing group,” she said.
She has also suggested a £50m injection to boost the childcare element of universal credit to cover families who have three or more children.
Campaigners from the Child Poverty Action Group warned that cuts planned for 2017 threaten to "destroy" the value of the Government's flagship Universal Credit scheme as a tool for reducing poverty.
CPAG chief executive Alison Garnham said: "Just-managing families have already taken a big hit from previously announced cuts and there are more in the pipeline."
Former work and pensions secretaries Iain Duncan Smith and Stephen Crabb have each spoken out against the reductions to Universal Credit, due to be introduced next year.
Today the Treasury also made no mention of proposed £30-a-week cuts to disability benefit Employment and Support Allowance (ESA).
What is Universal Credit?
Universal Credit is a single monthly payment for people in or out of work, which merges together some of the benefits and tax credits that you might be getting now.
The scheme rolls six benefits into one, this includes Income-based Jobseeker’s Allowance, Income-related Employment and Support Allowance, Income Support, Child Tax Credit, Working Tax Credit and Housing Benefit.
0 comments: