63 per cent, which means thatfor every £1 earned above the work allowance of a claimant, 63p is deducted automatically from their monthly social security payment. According to Labour, under this rate, a single parent who works 30 hours a week on the national living wage, will have £573 cure from their monthly universal credit entitlement, which amounts to a 75 per cent marginal tax rate. This is in stark contrast to the marginal tax rate of 47 per cent paid by people who earn over £150,000 a year. Therefore, the party is set to pledge to overhaul the scheme by enable low-income workers to earn more without losing a significant portion of their welfare payments cut.
The Guardian revealed that shadow work and pensions secretary Jonathan Reynolds will promise on Monday (30 August) to “make work pay” as part of the party’s strategy to create “jobs you can raise a family on”. “I am pledging today that the next Labour government … will reduce the taper rate when we replace universal credit. Improving our social security system to allow people to have jobs you can raise a family on is part of our new deal for working people,” the MP will say in a speech in Manchester.
In March last year, as the United Kingdom began reporting a surge in COVID-19 infections, a £20 rise in universal credit and tax credits was introduced with the aim of helping claimants adjust to the extra costs they bore on account of the pandemic. With this uplift set to be remove in October, the Labour party will also step up calls for the retention of the £20 rise, which has helped 700,000 people to stay above the poverty line over the past year.
