Universal Credit taper rate cut to benefit thousands in Midlothian

Thousands of working Universal Credit claimants in Midlothian will be able to keep more of the benefit as part of a major tax cut, figures suggest.

A Universal Credit sign on a door of a job centre plus in east London. PA.
A Universal Credit sign on a door of a job centre plus in east London. PA.

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 per cent to 55 per cent within weeks, to "reward work" of low-income families.

Department for Work and Pensions data shows 40 per cent of the 8,353 Universal Credit claimants across Midlothian were in work as of August 12 – the latest available figures. It means the tax burden on 3,368 claimants in the area will be eased when the move comes into effect before December 1.

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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 Midlothian, roughly 5,000 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.”

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The changes mean that nearly 2 million UK families 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”.

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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.

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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 has risen substantially during the pandemic. In Midlothian, the number of claimants rose by 67 per cent, from 5,018 in March last year.