A Liverpool City Councillor has accused the Government of “conning” the public into believing the so-called National Living Wage (NLW) will offset cuts to Universal Credit, it has been reported today.
Councillor Jane Corbett says cuts to Universal Credit will see the incomes of Liverpool families drop by between £60 and £200 a month.
George Osborne revealed changes to the way Universal Credit awards will be calculated in the Summer Budget, reducing the amount households can earn before Universal Credit payments are cut – ‘working allowance’.
Work allowance will also only be made available where a claimant or joint claimant has a child dependent and/or where they have limited capability for work.
Furthermore, the amount a person’s income can rise within a year (income disregard) before their claim is reassessed will be halved, from £5,000 a £2,500.
And the speed at which Universal Credit is removed will be increased by 10 percentage points to 65 percent: for every extra pound earned, a claimant will lose 65 pence from their Universal Credit award.
Councillor Jane Corbett, Liverpool City Council cabinet member for social inclusion, fairness and equalities, told the Liverpool Echo: “The government have no idea how people are surviving on very low incomes.
“They don’t understand that even a fiver here or there hits hard, so if you are losing between £60 and £200 a month, how on earth are people going to manage that?
“The government are conning people that the National Living Wage is going to cover the difference and it’s not. The government is not doing the basic maths on this.
“This is hurting people badly. Now children are growing up being damaged by this and the economy of the city is being damaged.
“They’re ideologically driven and it’s short-term thinking.
“The welfare system has now been made deliberately complex and the government is playing with smoke and mirrors.”
A leaked memo from Department of Work and Pensions (DWP) last month, appeared to admit that Universal Credit changes will leave some working people worse off, despite of the NLW.
Responding to the memo, Labour’s Shadow Work and Pension’s Secretary, Owen Smith MP, said Government claims that “no one is going to lose a penny” under Universal Credit have been “blown out of the water”.
Labour has since urged the Government to overhaul the “salami sliced” Universal Credit system, accusing George Osborne of using the welfare budget as a “cash cow” to fund tax cuts for the rich.
“Signifant concerns” have also been raised by the Office for Budget Responsibility (OBR), who say the Government has failed to keep pace with policy changes and hadn’t been transparent enough.
Dave Finch, a senior economic analyst at the Resolution Foundation, warned the changes risk trapping single parents in low-paid work.
“The cuts to the work allowances from the summer budget increase the risk that particularly single parents may be trapped in low hours of work”, he said.
“Once they are paying tax they will only keep 24p in every £1 that they earn.”
In a letter to Stephen Crabb, who replaced Iain Duncan Smith following his shock resignation last month, Mr Finch called on the new Work and Pensions Secretary “to review all of these decisions and to correct the mistakes made”.
“I urge you to grasp the opportunity to do so and I reassure you that I will support you wholeheartedly if you do”, he added.