Budget 2021: Warnings for child poverty in London as changes to Universal Credit slammed as ‘out of touch’

London’s child poverty charity has warned changes to benefits in the Budget bring “little to no relief” for the poorest families in society.

Chancellor Rishi Sunak announced today that the Universal Credit (UC) taper rate will be reduced by 8% no later than December 1, 2021.

The taper rate sets the amount of UC withdrawn from working claimants according to their salary.

Speaking in the House of Commons during the Budget, the Chancellor said the rate would be cut from 63% to 55%, allowing claimants to keep more of their payments.

He told MPs: “For many of the lowest paid in society there is a hidden tax on work.

“The UC taper withdraws support as people work more hours.

“Let us be in no doubt, this is a tax on work and a high rate of tax at that.

“To make sure work pays and to help some of the lowest income families in our country keep more of their hard earned money I have decided to cut this rate by 8%.

“This is a tax on working people and we are cutting it from 63% to 55%.”

But the policy was criticised by charities for not doing enough to tackle child poverty, low income families and the rising energy, food and fuel bills comprising the cost of living crisis.

While Wes Streeting, shadow child poverty secretary, blasted the chancellor as “out of touch” and described the policy as “fundamentally unfair”.

Mr Streeting, Labour MP for Ilford North, said: “Labour welcome the change in the taper rate but coming alongside the ending of the £20 a month UC uplift, there are around four million people who will be worse off as a result.

“Working people on Universal Credit will still face a higher marginal tax rate than the prime minister, which hardly seems fair.

“What Rishi Sunak has done is taken £6bn out of the poorest people’s pockets and given them back £2bn and expected them to be grateful. It seems fundamentally unfair.”

Mr Streeting, who also criticised the chancellor for cutting duties on champagne during a TalkRadio interview, added: “I don’t think this budget reflects the cost of living crisis the country is facing.

“People are seeing their food and fuel bills rising and inflation is set to rise by 4pc.

“I don’t think the Chancellor has done enough for people who are struggling to get by.

“The problem is that he’s fundamentally out of touch with people in this country on low incomes.

“A Labour government would cut VAT on energy bills to help people make ends meet and also called for the minimum wage to rise to at least £10 an hour, to lift people’s incomes.”

While Laurence Guinness, chief executive of The Childhood Trust, London’s child poverty charity, said: “Whilst we welcome the increase in minimum wage and the positive change in universal credit taper there will still be, after housing costs, hundreds of thousands of children living in poverty in London.

“Little will change for those who are unable to work, struggling with unaffordable rents and insufficient income for energy and food costs.

“They need help right now and the chancellor’s budget brings no relief for the most vulnerable and disadvantaged of our children.”

However, Katie Schmuecker, from the Joseph Rowntree Foundation, which aims to eradicate poverty in the UK, stressed that the impact of the budget will be felt worst by those not in work, who face “immediate hardship”.

She said: “This is a tale of two budgets for families on low incomes.

“For those in work, the change to the taper rate and work allowance, alongside the National Living Wage increase, are very positive steps, allowing low-paid workers to keep more of what they earn.

“But the reality is that millions of people who are unable to work or looking for work will not benefit from these changes.

“Among the people in our society who cannot work are cancer patients, people with disabilities and those caring for young children or elderly parents.

“Their energy bills and weekly shop are going up like everyone else’s and they face immediate hardship, hunger and debt in the months ahead.

“The Chancellor had an opportunity to support families on the lowest incomes to weather the storm ahead, and he did not take it.”

The Treasury said: “The UK government will provide billions of pounds to deliver the priorities of the British people by investing in stronger public services, levelling up opportunity, driving business growth and helping working families with the cost of living.”