Universal Credit

Treasury written question – answered on 26th October 2021.

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Photo of Richard Holden Richard Holden Conservative, North West Durham

To ask the Chancellor of the Exchequer, pursuant to the Answer of 20 October 2021 to Question 56619 on Universal Credit, whether his Department has made a comparative assessment of the potential effect on public finances of an (a) increase and (b) decrease of (i) 1p, (ii) 3p and (iii) 13p per £1 to the earnings taper rate for universal credit.

Photo of Simon Clarke Simon Clarke The Chief Secretary to the Treasury

Through Universal Credit, the government has designed a modern benefit system that ensures it always pays to work and withdraws support at a gradual rate as claimants move into work, replacing the old legacy system which applied effective tax rates of over 90% to lower earners in some cases.

There has been significant investment in Universal Credit in recent years, including the reduction of the Universal Credit taper rate from 65% to 63% announced at Autumn Statement 2016 and the £1,000 p.a. increase to Work Allowances announced at Autumn Budget 2018, which means working parents and people with disabilities on UC are up to £630 better off each year.

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