Labour sets out plans to replace Universal Credit

A Labor government would replace universal credit with a welfare system that would allow low-income welfare workers to keep more of their takeaway income.

Shadow Work and Pensions Secretary Jonathan Reynolds will address a social enterprise in Manchester today (23 Aug) outlining Labor’s plans to end the current benefit regime.

Universal Credit – introduced by former Conservative Leader Sir Iain Duncan Smith when he was in charge of work and pensions during the coalition government – was a reform that combined a number of benefits and tax credits, such as housing benefits and income-related unemployment benefits, into a single unit and payment.

Labor said its replacement proposal will lower the rate of rejuvenation so that low-income workers can keep more of the money they make.

Mr. Reynolds is expected to say, “Improving our social security system to enable people to have jobs that allow them to raise families is part of our new deal for professionals.

“Reducing the phasing out rate, increasing the minimum wage immediately to £ 10 an hour, sick pay for everyone, protection from unfair layoffs and the right to flexible working hours for all workers are part of our plans to make work worthwhile.”

Under the current system, Labor said that for every £ 1 earned by an applicant, 63p will be automatically deducted from their universal loan payment by the taper rate.

The deduction is in addition to any income tax and social security charges, opposition officials said.

According to the party’s research, a single parent who works 30 hours a week loses £ 573 a month from their universal credit – the taper rate combined with national insurance and income tax, which makes up their marginal effective tax rate of 75%.

In contrast, someone who earns more than £ 150,000 a year only has an effective marginal tax rate of 47%, according to Labor.

Shadow Cabinet member Mr Reynolds will use his speech to appeal to Tory MPs to rebel against a proposal to cut the £ 20 weekly hike for universal loan recipients.

According to the Department of Labor and Pensions (DWP), nearly three and a half million children will be affected by the planned deportation of the raise over the next month, which was made to help people weather the effects of the coronavirus pandemic.

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