DWP makes huge changes to Universal Credit payments – more money for benefits claimants

Gordon Brown criticises Sunak over Universal Credit policy

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As per the Chancellor Rishi Sunak’s Autumn Budget pledge, the tape rate on payments has been reduced from 63 percent to 55 percent.

The taper rate is a term used to describe the deduction that is made on someone’s Universal Credit payments depending on how much they earn.

On top of this move by the Department for Work and Pensions (DWP), work allowances have been raised by £500 a year.

According to Prime Minister Boris Johnson, low-income households will be able to keep more of what they earn without risk of losing any cash they receive from the DWP.

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The reduction to the taper rate represents a tax cut worth £2.2billion for the UK’s lowest earning citizens.

As well as the taper rate cut, the Prime Minister has also hiked the minimum wage to assist families who are struggling with the rising cost of living.

Boris Johnson said: “It’s right that we support hard-working families, and this change will help some of the country’s lowest income families keep more of their money.

“Together with the increase in the minimum wage and our investments in skills and training, it shows this is a government committed to making work pay.”

Thérèse Coffey, the DWP’s Work and Pensions Secretary, explained why Universal Credit claimants are set to benefit from the taper rate reduction.

Ms Coffey said: “Tens of thousands of the lowest earners will see a boost to their bank accounts today following changes to Universal Credit, meaning that people can keep more of what they earn to help with the cost of living.

“We introduced this change earlier than planned which will see up to 500,000 more households benefiting before Christmas.”

In a hypothetical example, the DWP said that a single mother of two, renting in Darlington who works a full-time job on the National Living Wage, will see benefit from the recent changes as her take-home income will go up by £1,200 on an annual basis.

Furthermore, the DWP implemented these changes as soon as possible after the Budget so families could benefit from them before the Christmas holiday season.

The changes to the Universal Credit taper rate are likely to stay in place for the foreseeable future as households manage rising bills and living costs.

However, some organisations are calling for more help from the Government for those who are struggling to cope in the current financial climate.

Derek Mitchell, the Chief Executive of Citizens Advice Scotland, said: “Changes to Universal Credit so working people can keep more of what they earn are very welcome, and something Citizens Advice Scotland has been campaigning for.

“However, for many it will not make up for the impact of reducing Universal Credit by £20 per week earlier in the month, particularly as inflation is rising and energy bills have gone up.

“In Scotland, around four in 10 people in Universal Credit are in work – so changes to the taper rate don’t help six in 10 claimants.

“Analysis by Citizens Advice Scotland revealed that over 1.4million people ran out of money before pay day during the pandemic.

“People are facing a perfect storm this winter and the CAB network is here to help, nearly 60 percent of the advice we gave last year was helping people maximise their incomes.”

Those in need of help, despite the changes to Universal Credit, are encouraged to reach out to Citizens Advice for guidance.

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