LibLink: Stephen Lloyd: Universal Credit was meant to make work pay – it’s causing nothing but grief, pain and anger

Our social security spokesperson Stephen Lloyd has been talking about how badly the Government has cocked up the implementation of Universal Credit for a while. We supported it in coalition but as soon as we were consigned to the back benches, depleted, the Tories ripped loads of money out of it.

He’s now written for the Huffington Post about what a nightmare this new system is.

And a crucial part of this incentive was the Work Allowance. This is the maximum amount a UC claimant can earn through employment, before their benefit payments are reduced. However in the Summer 2015 budget, with the Lib Dems no longer in Government and unable to keep the Tories in check, the then Chancellor George Osborne tore the Work Allowance to shreds – to the tune of £3billion a year.

These savage reductions in the amount of money a UC claimant can earn before their benefits are reduced has adversely affected almost all in-work UC households. Research from the House of Commons Library has shown for instance that some families have been made worse off by as much as £4,849 per year, a staggering amount if you are on a low income

To put that into perspective, the tax-free Personal Allowance threshold is £11,800, above which the income tax rate is 20%, rising to 40% and eventually a maximum of 45% at the very top end. Meanwhile a UC claimant earning just £2,376 (if UC includes housing costs) will lose 63% of their earnings above that amount, or put another way, they’ll pay back almost two thirds of their salary!

Stephen is trying to raise awareness of this and has submitted a motion to Parliament:

That is why I have submitted an Early Day Motion to Parliament calling on the Government to restore the Work Allowance to its original levels. I am aware that some Tories have begun to publicly acknowledge the dreadful consequences of the cuts to UC made in 2015, so this is an opportunity for them to clear their consciences before Philip Hammond presents his Autumn Budget. He must right this wrong before it’s too late and the rollout of UC accelerates next year.

If he does so then one of the truly revolutionary aspirations of the Coalition Government will finally take off. If not, Universal Credit will continue to cause nothing but grief, pain and anger for our poorest citizens. Without restoring the Work Allowance to its original levels, the government will be stating a clear intention to tax these families back into benefit dependency.

And if that happens my question to the Tories is simple – what’s the point of Universal Credit?

* Newshound: bringing you the best Lib Dem commentary published in print or online.

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