Ahead of the Chancellor’s Autumn Budget I received a number of emails concerning work allowances and Universal Credit (UC).
UC is a single payment which will replace six means-tested benefits and tax credits for working-age individuals and families. When a claimant starts work, the amount of UC they receive will gradually reduce as their earnings increase. The work allowance is the amount that claimants can earn before their UC payment is affected. Claimants are eligible for work allowances if they, or their partner, have responsibility for a child or a limited capability for work.
At the Summer Budget 2015 the Government reduced work allowances for most UC claimants. This was part of a broader commitment to save £12 billion from the working-age welfare budget by 2019-20. I believe that this reduction unfairly targeted low-income families and directly contradicted the policy’s aim of making sure work always pays.
At the recent Autumn Budget, the Chancellor announced that work allowances would be increased by £1,000 from April 2019. It is understood that this will mean that 2.4 million households will keep an extra £630 of their income each year. This announcement on work allowances reverses just over half of the cuts made in 2015. To make a real difference, the Chancellor needed to restore work allowances for UC recipients who are single and without children.
In addition, I am concerned that the Government has not addressed wider cuts to social security or the structural problems with UC. Figures from the Institute for Fiscal Studies suggest that there are £5 billion worth of cuts to social security still to come in this Parliament.
UC was intended to lift people out of poverty and smooth the transition into work to ensure that it always pays. Unfortunately, the programme has acted as a vehicle for cuts and caused real hardship for many people across the UK. It has pushed claimants into debt, rent arrears and forced some to rely on food banks. I believe that the rollout of UC should be stopped and the freeze on social security payments ended.
Thank you to everyone who has contacted me about this issue. I am committed to rebuilding and transforming our social security system and my Labour colleagues and I will continue to press the Government on this important issue at every opportunity.