South West foodbank warns change to Universal Credit won't help working families
The Chancellor says the newly-announced taper scheme will allow them to keep more of what they earn
Last updated 28th Oct 2021
Working families claiming Universal Credit are questioning how much they will benefit from a change in the way the money is worked out.
Chancellor Rishi Sunak says a taper scheme announced in the budget will allow people to keep more of what they earn, but it comes as the £20 per week uplift is scrapped.
Foodbanks, including one in Devon which is giving out 7,000 meals a week, are among the groups criticising the plan.
Catherine Fritz from the Torbay Food Alliance does not believe the change will make much of a difference.
She said: "I was shocked that a single mother of two, working full-time at the national living wage, still needs to be on benefits. There's something wrong. The money isn't enough to support working full-time".
"We have more people coming to the helpline and to foodbanks for the first time ever in their lives.
"They may have come off furlough, they may have been on Universal Credit and lost the £20 uplift, they're facing increased food bills, they're facing increased costs across the board.
"Some of them don't have the work they used to have and even those who do - the money doesn't go as far as it used to".
How does the Universal Credit Taper work?
The taper rate means that if people work more hours, their support is gradually withdrawn. It was withdrawn far more quickly in the old system.
Currently that taper rate starts at 63 pence – so for every £1, after tax, a person earns, their UC payment is reduced by 63pence.
The Chancellor says the government is taking 'decisive action' to make sure work pays, and permanently cutting this taper rate by 8p from 63p to 55p, ensuring more money in people’s pockets.
Some households can earn a set amount before the taper kicks in. This is called the work allowance.
What is the Work Allowance?
Households on UC who are in work and either looking after a child or have a household member with limited capability for work are being supported with an increase in their work allowances.
This is the amount that a person can earn before support begins to be withdrawn as the taper rate kicks in.
Work allowances are currently set at £293 a month if the household receives housing support, or £515 if they do not receive housing support. These are both being increased by £500 per year.
Who is affected?
1.9 million households will benefit from these changes. For example, within five weeks, as a result of these changes:
• A single mother of two, renting in Darlington, working a full-time job on the National Living Wage, will see her take-home income increase by £1,200 on an annual basis.
• A couple with two children, renting their home with their two children, where one partner works full time at the National Living Wage, and the other works 16 hours a week at National Living Wage will be £1,800 per year better off.
The Treasury says taken together, this is an effective £2.2bn tax cut for around two million of the lowest earning working families.
This applies to England, Scotland and Wales. The Northern Ireland Executive will be provided with funding to implement an equivalent measure.
When will it be introduced?
Changes like this are usually introduced at the start of the financial year in April, but the government says in order to support families through the winter, the reduction to the taper rate and increase to the work allowances will be implemented by the beginning of December 2021.