The steps that have been taken to confront the coronavirus public health emergency have been absolutely necessary, but there can be no doubt that they have had a profound effect both on our economy and the finances of millions of households.
As I am sure you are aware, extra support was announced by the Chancellor as a temporary measure in March 2020 to support those likely to be facing the most financial disruption as a result of the public health emergency. Alongside the temporary increase to Universal Credit and Tax Credits, the Government invested over £352 billion in measures to create, support, and protect jobs and businesses – as well as introduced measures such as mortgage holidays and additional support for renters, and has worked with energy suppliers to protect those struggling with energy bills.
I welcome the decision announced at the 2021 Autumn Budget to reduce the UC taper rate from 63 per cent to 55 per cent, as well as increasing work allowances in UC by £500 a year. These changes to UC represent an effective tax cut for low income working households in receipt of UC worth £2.2 billion in 2022-23. During his recent Financial Statement, the Chancellor stated the following in relation to the taper rate reduction:
“Let me tell the House what these changes mean. A single mother of two renting and working full-time on the national living wage will be better off by around £1,200. A couple renting a home with their two children, one parent working full-time, the other working part-time, will be better off every single year by £1,800. 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.”
It is also important to note that the National Living Wage will increase by 6.6 percent from £8.91 to £9.50. This increase will be effective from April 2022 and covers 23 and 24 year olds, having been extended to this age group in April 2021.
Furthermore, in April 2020 the Local Housing Allowance (LHA) rate was increased to the 30th percentile of local market rents for Universal Credit and Housing Benefit claimants an investment costing nearly £1 billion and providing 1.5 million households with £600 more housing support per year than they would otherwise have received. I welcome that this increase will be maintained in cash terms this year.
In the 10 years prior to the pandemic – employment was at record high levels, thanks to the Government’s careful handling of the economy. This allowed the Government to provide an unprecedented response during the past 18 months. Now as we open up and our recovery gathers pace, it’s right that focus is switched to getting people back into work and improving their prospects. To support this the Government announced a multi-billion-pound Plan for Jobs and I know my colleagues in the Department for Work and Pensions remain focused on supporting people by helping them get back into work through the Government’s Plan for Jobs, including schemes such as Kickstart.
I am encouraged to hear that the £2 billion Kickstart scheme has already seen over 69,000 16 to 24 year olds on UC take up roles across a variety of sectors. This will give young people the practical experience that we know is so crucial in securing sustainable employment. Furthermore, the £2.9 billion Restart scheme, which opened fully on 12th July 2021, will provide intensive work search support to over a million jobseekers out of work for over 12 months.
As I am sure you are aware, the Minimum Income Floor (MIF) was temporarily relaxed in April 2020 to support self-employed people at the height of the pandemic. As restrictions have been removed, the MIF is being gradually reintroduced since August, at which time Work Coaches will be given discretion to further suspend the MIF to ensure that those claimants who continue to be severely affected by Covid-19 restrictions can be supported on a case-by-case basis.
Finally, I am encouraged that if people need help to pay bills or cover other costs while awaiting the first Universal Credit payment, it is possible to apply to receive an advance. Doing this effectively allows claimants to spread their annual entitlement over 13 payments rather than 12. From 12 April, claimants issued with a New Claims or Benefit Transfer Advance have been able to spread their annual entitlement over 25 payments over two years. I am aware of calls to make the advance payment a grant. However, colleagues in the Department for Work and Pensions have informed me that four and a half million people have claimed Universal Credit since mid-March. I do not believe it would be fair to pay higher overall awards exclusively to those Universal Credit claimants who apply for advance payments.