Skip to main content

The £20-a-week Universal Credit uplift is no more.  Instead, there is an increase to the work allowance and a reduction in the taper rate.  This helps those in work but not by as much as the original uplift.  Here is a quick guide to what you need to know.

What exactly has changed?

Despite protests, the government has removed the £20-a-week uplift to Universal Credit.  This was always intended to be a temporary measure to help lower-income households deal with the impact of COVID19.  Critics have questioned the wisdom (and compassion) of removing it so soon, particularly with inflation running so high.  The government has, however, chosen to end it as planned.

The work allowance has been raised from £293/£515 per month (for people with/without housing costs included in their Universal Credit award) to £793/£1000 per month.  Work allowance is available to people who have responsibility for a child and/or limited capability for work (or who have a partner who does).

The taper rate has been changed from 63% to 55%.  The taper rate is the amount by which your Universal Credit is reduced when your earnings exceed your work allowance.  Now Universal Credit claimants who earn more than their work allowance can keep 45p of every extra pound they earn instead of 37p.

Who wins and who loses

Technically nobody wins.  According to Treasury figures, working households on Universal Credit can now keep an average of an extra £1000 a year.  The Universal Credit uplift, however, was worth £1040 a year.  The question, therefore, is really, who loses the most?

The answer is about two-thirds of households that claimed Universal Credit in recent months.  Of these, however, the worst off by far are likely to be the disabled and/or those with caring responsibilities.  The reason for this is that the job market is currently very strong.  This is clearly in favour of people looking for work.  The disabled and carers, by contrast, are less likely to be able to take advantage of this.

You could potentially argue that the taxpayer as a whole wins due to the reduction in spending on Universal Credit.  Whether or not this works in practice, however, is likely to depend very much on how well people adapt to the change.  For example, if a reduction in benefits means that people can’t afford to eat properly or to heat their homes then the taxpayer may still end up footing the bill.  In fact, they may even end up paying more.

What happens now?

Anyone on Universal Credit struggling to make ends meet should check to see if they are getting everything to which they are entitled.  Universal Credit replaced six “legacy benefits” but it’s not the only form of support there is.  For example, if you are in receipt of Universal Credit, you may be eligible for a reduction in Council Tax but you usually need to apply for that separately.  Some private companies also do special deals for people on Universal Credit.

If you’re not confident negotiating the benefits system, then make sure you get the help you need.  If you don’t have family or friends to support you, you may still be able to get assistance from organisations such as Citizens Advice (also known as CAB).

If you are able to make ends meet then see if there is anything you can do to save money.  In particular, check if you are eligible for a Help to Save account.  If you are, you can get your savings topped up by a government bonus.  This could help you to build a cash cushion to help you through life’s ups and downs.

If you require financial help or advice regarding any debts you currently have, please contact us

Blackpool: 01253 299 399 | Carlisle: 01228 558 899