Universal Credit taper rate cut to benefit more than 10,000 in Peterborough

Chancellor Rishi Sunak announced in his latest Budget that the taper rate, the tax on a claimant’s payment for every £1 that they earn above their work allowance, will be cut from 63% to 55% within weeks, to “reward work” of low-income families.

Department for Work and Pensions data shows 46% of the 26,789 Universal Credit claimants across Peterborough were in work as of August 12 – the latest available figures.

It means the tax burden on 12,340 claimants in the area will be eased when the move comes into effect before December 1.

Of the claimants in work as of mid-August, the largest number (2,239) were aged between 30 and 34.

Mr Sunak has faced some criticism that the taper rate cut does not compensate for the £20-a-week blanket reduction in Universal Credit in early October, or help people who are not in work.

In Peterborough, roughly 14,400 Universal Credit claimants were not in work as of August 12.

Announcing the changes to the Commons, Mr Sunak said: “This is a £2 billion tax cut for the lowest paid workers in our country.

“It supports working families, it helps with the cost of living and it rewards work.”

The changes mean that nearly 2 million families across the UK will keep on average an extra £1,000 a year, he said.

But responding to the Budget, Labour’s shadow chancellor Rachel Reeves said “never has a Chancellor asked the British people to pay so much for so little”.

She said: “After taking £6 billion out of the pockets of some of the poorest people in this country, he is expecting them to cheer at being given £2 billion to compensate.”

Thomas Lawson, chief executive of anti-poverty charity Turn2us, said the changes are “welcome steps” to make sure people on low incomes keep more of their wages.

However, he added: “For single parents and others with caring responsibilities the benefits will be smaller, and for people unable to work at all, this will do nothing to help with the rising cost of living.”

The number of people on Universal Credit across Great Britain has risen substantially during the pandemic.

In March 2020, some 3 million people were on the means-tested benefit, but by August this year that figure was at 5.8 million – a 93% increase.

In Peterborough, the number of claimants rose by 97%, from 13,580 in March last year.