Source · Select Committees · Scottish Affairs Committee
Recommendation 107
107
Should a claimant earn more than their work allowance, their Universal Credit payments will be...
Conclusion
Should a claimant earn more than their work allowance, their Universal Credit payments will be reduced at a rate (known as a taper rate) of 63p for every £1 earned.275 However, since 2015 ‘only people with limited capability for work, or, people with a child or children are entitled to a Work Allowance’276 as a result of the Universal Credit Work Allowance Amendment Regulations.277 This means that claimants without children or a limiting health condition are not entitled to any work allowance: consequently, as soon as they start earning money from a job, they are subject to the taper rate as described above. Written evidence from Citizen’s Advice Scotland noted that a majority of people ‘new’ to their benefit advice services since April 2020 are currently impacted by this policy choice, where ‘Over 6 in 10 (62%) of the clients seeking Universal Credit advice for the first time since April do not have children nor a limiting health condition/disability–therefore will not be entitled to any Work Allowance.’278
Government Response
Not Addressed
HM Government
Not Addressed
Universal Credit aims to reduce the number of workless households by reducing financial and administrative barriers to work. The 63% single earnings taper rate ensures that payments reduce in a transparent and predictable way as earnings increase. A work allowance is an amount that claimants can earn before their Universal Credit starts to reduce by the taper rate. The work allowance is targeted on those claimants with the greatest barriers to the labour market namely those responsible for children or who have limited capability for work. The UK Government has no plans to extend the work allowance to single adults. The work allowance is increased each year as part of the normal benefits uprating process. In addition, at the Autumn 2018 budget, an extra £1.7 billion a year was put into work allowances to increase them by £1,000 in April 2019, strengthening the Universal Credit work incentives even more and providing a boost to the incomes of the lowest paid. This resulted in 2.4 million families keeping up to an extra £630 per year of what they earn.