Hounslow MPs Seema Malhotra and Ruth Cadbury have called on the Government to halt its proposed cut the Universal Credit Work Allowance which is planned from April 2016.
Universal Credit is set to replace six existing benefits. Over 500 families are currently in receipt of Universal Credit with 26,000 households in Hounslow forecast to be on Universal Credit by 2020 . Thousands receiving in work support will be subject to far lower incomes as a result of the proposed cuts to Universal Credit. The changes are set to hit the Work Allowance – that part of Universal Credit that is essential to making work pay.
For a single mother with one or more children, the work allowance will be halved from April of this year from £8,808 to £4,764, a reduction of £4,044. The Institute for Fiscal Studies says 2.6million families on Universal Credit will be £1600 a year worse off by 2020.
Ruth Cadbury MP said: “Many people—including many on the Tory Benches—do not quite yet appreciate what is going on. The cuts to tax credits have merely been delayed and disguised and are will make it harder for working families in Hounslow to make ends meet. Millions of pounds will be taken out of the local economy. The Chancellor must think again.”
Further useful information
1. The debate in the House of Commons Chamber was held on the on 6th January 2015. The motion was to call on the Government to reverse the cuts.
2. For a single mother with one or more children, the work allowance will be halved from April of this year from £8,808 to £4,764, a reduction of £4,044. In cash terms, that working mother will lose £2,628 next year. For a joint couple living and working together, one or both with limited capacity to work as they are disabled, their budget —the work allowance—will be cut from £7,700 to £4,700, a loss of £3,000 in their income. A single individual in receipt of UC will lose everything—a £1,332 reduction; a net loss to their income of £865.
3. Around 550 families are currently on UC in Hounslow and will be hit by the cuts from this April.
4. 26000 families in Hounslow are forecast to be on UC by 2020.
5. The work allowance is the amount of income that Universal Credit claimants can earn before their Universal Credit award is tapered away (at a rate of 65%). There were two major cuts to in-work support in the Summer Budget – one for tax credits and one for its replacement, Universal Credit. The Chancellor reversed the cuts to Tax Credits.