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24 September, 2021 Open access

Government considering reduction in universal credit taper rate from 63 per cent to 60 per cent

Reports that the DWP is lobbying the Chancellor to fund reduction as partial mitigation for imminent removal of £20 a week universal credit uplift

The government is understood to be considering a reduction in the universal credit taper rate from 63 per cent to 60 per cent.

According to reports, the DWP is lobbying Chancellor Rishi Sunak to incorporate the taper rate reduction - that would cost around £1 billion per year - into his Autumn Budget on 27 October 2021 in order to partially mitigate the impact of the removal of the Covid-19-related £20 universal credit uplift from 6 October 2021, which is expected to save £5-6 billion per year.

The Guardian reports that - 

'The mooted plan is a sign of the pressure felt by the DWP and the government more widely ahead of the end of a £20 a week increase in universal credit, brought in during the pandemic but due to end on 6 October – the day Boris Johnson makes his leader’s speech to the Conservative conference.'

However, quoted in the Mirror, Resolution Foundation Senior Economist Carl Hanscomb said that while reducing the taper rate would raise incentives for workers to earn more -

'... this is no alternative to maintaining the £20 a week uplift to universal credit.

The gains are far smaller than the £20 a week cut, and would flow to better off families on universal credit while three million families would gain nothing at all.

Virtually all households would still be significantly worse off overall.'

For more information, see Ministers consider plan to ease £20-a-week universal credit cut and Tories in secret talks to raise Universal Credit for 2.3million - weeks after cut.