The Work and Pensions Secretary has been accused of getting her figures wrong after suggesting that people who lose £20 a week from their Universal Credit could work an extra two hours to make up for it.
Welfare experts assessed that some would need to work closer to an extra nine hours a week to make up for the cut, and Labour branded Therese Coffey’s remarks an “insult to hard-working families”.
But the Department of Work and Pensions defended Ms Coffey’s remarks by saying that for some of the “lowest earners” working two hours per week “can” add up to taking home £20 in specific circumstances.
The Cabinet minister had been defending the move to end the increase introduced in response to the coronavirus pandemic by saying it had always been “temporary”.
Universal Credit claimants take home as little as £2.24 for every extra hour worked – highlighting how hard it is to work their way out of a huge living standards loss this Autumn – our quickfire take on today's row over the coming £20 a week cut to UC. https://t.co/LcwXDidqoz pic.twitter.com/Jjv08lA8HF
— Resolution Foundation (@resfoundation) September 13, 2021
She was speaking as the Government faces growing calls to keep the extra money in place amid concern that the plans will heap further pressure on struggling families.
Ms Coffey told BBC Breakfast: “I’m conscious that £20 a week is about two hours’ extra work every week – we will be seeing what we can do to help people perhaps secure those extra hours, but ideally also to make sure they’re also in a place to get better paid jobs as well.”
But the Resolution Foundation contradicted her remarks due to the taper rate meaning that – over their work allowance – Universal Credit claimants only take home 37p per extra pound earned due to a lower benefit award, a figure that falls to 25p if they earn enough to pay tax and National Insurance.
The think tank’s analysis cited the example of a Universal Credit claimant earning the national living wage and making an income of at least £6,100 a year.
They would see their take-home pay fall to £2.24 an hour once taxes, National Insurance, pension contributions or additional childcare or travel costs are taken into account.
This means they would have to work an extra nine hours a week to make up for the loss.
The analysis also noted that more than one in four Universal Credit claimants are not expected to work due to health problems or they are caring for a young child.
This is a lie and the Work and Pensions Secretary either knows she’s lying or shouldn’t be in the job. An additional £20 for a UC claimant isn’t 2 hours work, that’s not how the taper works. An extra £20 would require £50+ worth of hours, that is how the UC system works. https://t.co/i4HzfDzJO8
— Angela Rayner (@AngelaRayner) September 13, 2021
Targeting Ms Coffey, Labour deputy leader Angela Rayner said: “This is a lie and the Work and Pensions Secretary either knows she’s lying or shouldn’t be in the job.”
But a Government spokesman said: “Many claimants are eligible for an in-work allowance, which means that the taper rate does not apply and people keep more of what they earn.
“For the lowest earners working two hours more per week at National Living Wage can add up to around £20.”
The DWP gave an example of a single parent working eight hours per week at £10 per hour and living with their parents, meaning there are no housing costs. This individual in this limited circumstance was said to not lose any money because it remains within their work allowance.
The Resolution Foundation’s principal economist, Adam Corlett, said: “The Government has tried to justify the coming cut to Universal Credit – and the huge income loss facing millions of households – by saying that it can easily be offset by simply working a few more hours. If only it were that simple.
“A small increase in working hours will be nowhere near enough to cover the £20-a-week cut coming their way in just one month’s time.
“Given the scale of losses coming to millions of low and-middle income households this autumn at the same time as bills are rising, the Chancellor should change course on Universal Credit.”
Ms Coffey also faced criticism over her remarks around implementing the cut.
Asked if she is entirely happy with the end of the increase, which will start to be phased out from the end of the month, Ms Coffey said “yes” and stressed the need to “accelerate our plan for jobs”.
The rise will be phased out from the end of the month, based on individual claimants’ payment dates.
Recipients could lose £1,040 annually if Prime Minister Boris Johnson goes ahead with the cut.