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13 September, 2021 Open access

Secretary of State fails to take into account universal credit taper rate in suggesting that claimants can make up for the loss of the £20 uplift by working two extra hours a week

Uplift was always intended to be temporary, but we will be seeing what we can do to help people 'perhaps secure extra hours', says Dr Coffey

Work and Pensions Secretary Dr Thérèse Coffey has seemingly failed to take into account the universal credit taper rate in suggesting that claimants can make up for the imminent loss of the £20 uplift by working two extra hours a week.

In an interview this morning with BBC Breakfast, asked about the 'deep concern' that has been expressed about the impact of ending the uplift, the Secretary of State said that -

'... last year when the £20 a week uplift standard allowance was put into place, it was done recognising, particularly, people new to benefits having lost their jobs perhaps for the first time ever, and so it made that standard allowance at that time similar to the minimum amount of money you would get through not being at work because you are sick. It was always intended to be temporary.

In the run-up to the budget we agreed within government we would extend this beyond when we expected lockdown to finish. And that would bring it to an end alongside the other support grants that we have been giving, whether it is furlough, whether it is self-employed support. I am conscious that we want to try and help people get on and work. That is why, using all the elements of the Plan for Jobs ... we are doing what we can to help people get into work and get on and get better paid jobs as well ...

£20 a week is about two hours extra work every week, we will be seeing what we can do help people perhaps secure those extra hours, but ideally also to make sure they are in a place to get better-paid jobs as well ...'

However, while the Secretary of State seemed to suggest that someone earning around £10 an hour could mitigate the loss of the uplift by working 2 extra hours a week, the impact of the 63 per cent taper rate in universal credit means that for every £1 that people earn over their work allowance, their universal credit will be reduced by 63p.

As a result, many people earning £10 an hour would be left with just £7.40 by working an additional 2 hours after the application of the taper, and would need to work more than 5 hours a week extra to be left with £20 (even ignoring any extra deductions, for example for tax or national insurance, or costs, including childcare, incurred by working the extra hours).

Later, asked in the Commons by Shadow Work and Pensions Secretary Jonathan Reynolds whether she was now aware that 'she got that completely wrong', the Secretary of State said -

'... it is fair to say that there are a number of different levers that happen when people work more hours, and that includes the lifting of the benefit cap, so there are a number of ways that people can actually earn more, keep more of their money when they are working more hours.'

NB - the Financial Times reported last week that, while a ministerial source has said that there is 'no chance' that the uplift will be made permanent, officials are said to be looking at easing the rate at which the benefit tapers for those in work.