Since the Universal Credit uplift cut at the beginning of the month, the government have been under pressure from charities and organisations to help those families who are losing a thousand pounds each year. Speaking on Wednesday morning ahead of the budget, Greater Manchester mayor Andy Burnham told the BBC: “On the rabbit out of the hat, I’m hearing that they are about to U-turn on Universal Credit.
“And actually, that is a credit to the Labour Party that’s that’s campaigned on that particular issue. And I hope that is the rabbit that’s in his hat today.
“We’re hearing that there’s going to be a change particularly for those on Universal Credit in work.
“If he’s going to do that, it’s the right thing to do. This pandemic is not over, people are still feeling its impact.
“But credit to those who’ve campaigned particularly those in the Labour front bench who’ve been consistent on this point.”
In response to the pandemic, a temporary £20 increase to Universal Credit payments was introduced to help those families who struggled.
However the scheme officially ended on October 6, forcing 500,000 – including 200,000 children into poverty, analysis by the Joseph Rowntree Foundation suggests.
While the Chancellor has argued that higher wages rather than taxpayer-funded benefit increases are a more sustainable option, the decision to cut this uplift has been met with controversy.
It has been predicted however that there will be a change in Universal Credit announced at the Budget.
The chancellor is expected to change the taper rate for claimants in work – a move which would let them keep more of their wages.
If the taper rate is changed, 1.7million households will benefit and be better off, according to The Joseph Rowntree Foundation.
The Universal Credit taper rate currently taxes people 63p in the pound on anything they earn over their base level of benefits.
Under plans reported by The Sun newspaper the Chancellor would change the taper rate from 63p to 60p – a change which would still fall short of some Tory MPs’ demands to cut it to 55p.
But while 5.5 million families are to be hit by the £1,040 uplift a year ending, just 1.7 million families will benefit from tweaking the taper by three pence.
It would help families who do benefit by an average just £5.60 a week, according to calculations by the Joseph Rowntree Foundation – well short of reversing the headline cut.
At the moment, claimants pay taper rate once they are earning above their Work Allowance – which is the amount of money you can earn before your Universal Credit payments are subject to being cut under the rate. Not everyone is eligible for a work allowance.
So people lose 63 pence of their maximum Universal Credit award payment for every one pound they earn over their Work Allowance.
Someone’s Work Allowance is lower if you get help with housing costs.
A work allowance is the amount that you can earn before your Universal Credit payment is affected.
The taper rate puts thousands of claimants off applying for better paid jobs or taking on more hours because more money will be taken.