The Chancellor’s easing of the pain of steep cuts to in-work benefits does not go far enough, Iain Duncan Smith has said.
The former Work and Pensions Secretary welcomed a “positive” move to cushion George Osborne’s past reductions to universal credit – expected in today’s Autumn Statement - but urged his successor to go further.
Noting that poor families would still lose two-thirds of the original cuts, Mr Duncan Smith said: “I consider this to be a downpayment – this is not game over.”
Today, Philip Hammond, the new Chancellor, will announce that the ‘taper rate’ – how quickly universal credit is withdrawn as recipients earn more – will fall from 65p to 63p in every pound.
The Resolution Foundation think-tank said a full-time worker on the ‘national living wage’ would gain up to £250 a year, rising to about £500 a year for a family earning £30,000.
But it warned that gain would be hugely outweighed by much-bigger losses from cutting the work allowance – the amount a person can earn before benefits start to be taken away.
Claimants will lose up to £2,800 a year from the work allowance change. Around three million families will lose more than £1,000-a-year, from 2022.
Speaking on BBC Radio 4’s Today programme, Mr Duncan Smith said: “I welcome what the government’s announcement is today
“Restoring approximately about a third of the reductions back to universal credit over the period of the time of its rollout has to be seen to be positive.”
But he urged Mr Hammond to follow a ‘here’s a starter for this, let’s see where we go over the next two or three years’ approach – as the Brexit uncertainty unfolded.
Mr Hammond’s lower taper rate is expected to cost the Treasury about £1 billion over the next five years – when the savings from the harsher work allowance will bring in around £3 billion.
Torsten Bell, director of the Resolution Foundation, said: “The most effective way to support families would be by reversing the £3 billion cut to work allowances announced by the last Chancellor.
“This move falls well short of the rhetoric that 'just managing' families have heard in recent months - giving them no jam tomorrow, let alone jam today.”
Mr Osborne, who was sacked by Theresa May in July, left in place the cuts to universal credit after last year’s embarrassing U-turn which stopped planned reductions to tax credits.
The new Tory leadership has also pressed ahead with a sharp reduction in the overall ‘benefits cap’, which will cost 88,000 families more than £2,000 a year.
And there is no sign of a U-turn on £29-a-week cuts to employment and support allowance for many sick and disabled people, which have also provoked widespread anger.
Shadow chancellor John McDonnell said: “This autumn statement is set to fail our first test to provide actual support for those on low and middle incomes.
“If all the chancellor is offering is a two per cent change in the taper rate, then it will be too little, too late for those working families who have had to bear the brunt of six wasted years of failed Tory economic policies.”Reuse content