‘A step in the right direction to reduce child poverty’
The City Council’s Cabinet Member for Children’s Services has welcomed the relaxation of Universal Credit rules to allow some of the poorest working families to keep more money in their pockets.
Sunderland has been one of the hardest hit following the Government’s decision to axe the £20 Universal Credit uplift payment with Sunderland Central, Washington and Sunderland West and Houghton and Sunderland South seeing 47, 51 and 49% of households with children in receipt of Universal or Working Tax Credit – used to top up the income of low wage families.
This North East represents the joint highest rate for Universal and Working Tax credit claimants with children of any region, alongside Yorkshire and Humber.
During yesterday’s (October 28) Budget, Rishi Sunak announced the taper rate for Universal Credit would be adjusted so the amount of benefit a worker will lose for every pound they earn above their worker allowance will be reduced to 55p in the pound from the current 63p.
Once Universal Credit claimants are earning above their work allowance - £293 if including housing support, £515 if not - they start getting less Universal Credit as they earn more from work.
The current Universal Credit taper rate of 63% means for every £1 earned by eligible households over their work allowance, the amount of Universal Credit paid to the claimant is reduced by 63p. So if someone earned £100 in a month above their work allowance, they would lose £63 from their monthly Universal Credit claim due to the 63% taper rate.
Under the new proposal, they would only lose 55p in every pound for earnings above the threshold.
During his Budget speech, Rishi Sunak said: “This means a single mother of two earning the national minimum wage would see their take-home pay increase by around £1,200 a year.”
Sunderland City Council’s portfolio holder for Children’s Services, Louise Farthing, has long been a campaigner for greater support for those in need to help eradicate child poverty across the North East.
Responding to the change, which will be implemented no later than December 1, Cllr Farthing said: “I am pleased the restrictions on Universal Credit have been relaxed which will see some families more than £1,000 better off.
"I am also pleased it has been introduced before Christmas – which will be a big help for families – rather than waiting until the new financial year.
"However, with the tax rises and increases in the cost of living, I am not sure how much better off some families will be. At least this is a sign we are moving in the right direction in trying to reduce child poverty.”
The announcement comes after 5.5million people across the UK saw their Universal Credit payments cut by £1,040 per year, after the £20 per week uplift was withdrawn on October 6.
Cllr Farthing added: “For some families, this loss will be superseded by the new taper rate but for others, it won’t.
"This also won't benefit those non-working families in receipt of Universal Credit.”