London Daily

Focus on the big picture.
Thursday, Oct 02, 2025

Millions will not benefit from Sunak’s ‘tax cut for low paid’, say activists

Millions will not benefit from Sunak’s ‘tax cut for low paid’, say activists

Campaigners say plan provides no extra support for people who are unemployed or unable to work
Millions of struggling low-income households will not benefit from the £2bn “tax cut for the low paid” announced by the chancellor in the budget as a way of easing the pain of soaring living costs, according to campaigners.

The reduction from 63p in the pound to 55p in the universal credit taper rate – the amount in benefits a claimant loses for each pound they earn above a set work allowance – was intended to soften the blow of the withdrawal this month of the £20-a-week universal credit uplift.

Calling it a “tax cut for low-paid families”, the Rishi Sunak said about 2m qualifying households would be at least £1,000 a year better off. He also announced a £500 boost to the work allowance and confirmed a 6.6% rise in the “national living wage” to £9.50 an hour.

There has been increasing concern, including on the Tory backbenches, that the removal of the £20-a-week uplift will hit millions of households already struggling with rent, soaring energy and food bills and next April’s rise in national insurance contributions.

The Institute for Fiscal Studies (IFS) said the changes meant a full-time minimum wage worker on universal credit would have their disposable income increase by £250 a year as a result of the minimum wage rise and an extra £1,000 a year or more as a result of the universal credit changes.

However, the shadow work and pensions secretary, Jonathan Reynolds, said: “While it’s welcome that the chancellor is following our lead and reducing the taper rate, he is taking people for fools if he thinks this alone makes up for the biggest ever cut to social security, tax hikes and a cost of living crisis.”

Anti-poverty campaigners said it provided no extra support for millions of people who were unemployed or unable to work because of disability or illness, or claiming working tax credits. The boost amounted to just a third of the £6bn a year spent on the universal credit uplift received by 5.5 million claimant families.

Katie Schmuecker, the deputy director of policy at the Joseph Rowntree Foundation, said: “The reality is that millions of people who are unable to work or looking for work will not benefit from these changes. The chancellor’s decision to ignore them today as the cost of living rises risks deepening poverty among this group, who now have the lowest main rate of out-of-work support in real terms since around 1990.”

The chancellor’s changes reset the taper to the more generous level envisaged by the political architect of universal credit, Iain Duncan Smith, as a way of improving work incentives. He was overruled by George Osborne, who as chancellor set it instead at 65%. It was reduced to 63% in 2017.

The taper rate cut – more generous than a mooted 60p cut – may placate nervous Tory backbenchers: in 191 Tory-held parliamentary seats more than 30% of low-income working families were hit by the cut to the universal credit uplift. Labour has previously proposed reducing the taper but did not say at what rate it should be set.

Sara Ogilvie, the policy director of Child Poverty Action Group, said: “The long-overdue decision to lower the universal credit taper rate will help lots of low earners. But there was nothing for those who cannot work – carers, those with young children and people who are sick or disabled – who face the same cost pressures as other households and will still have a black hole in their finances after the universal credit cut.”

Louise Rubin, the head of policy at disability equality charity Scope, said: “The budget does little to address the fears of many disabled people and families about their finances this winter. The cut to universal credit, sky-high inflation and spiralling energy costs will hit disabled households hardest.”
Newsletter

Related Articles

0:00
0:00
Close
Trump Administration Launches “TrumpRx” Plan to Enable Direct Drug Sales at Deep Discounts
Trump Announces Intention to Impose 100 Percent Tariff on Foreign-Made Films
Altman Says GPT-5 Already Outpaces Him, Warns AI Could Automate 40% of Work
Singapore and Hong Kong Vie to Dominate Asia’s Rising Gold Trade
Trump Organization Teams with Saudi Developer on $1 Billion Trump Plaza in Jeddah
Manhattan Sees Surge in Office-to-Housing Conversions, Highest Since 2008
Switzerland and U.S. Issue Joint Assurance Against Currency Manipulation
Electronic Arts to Be Taken Private in Historic $55 Billion Buyout
Thomas Jacob Sanford Named as Suspect in Deadly Michigan Church Shooting and Arson
Russian Research Vessel 'Yantar' Tracked Mapping Europe’s Subsea Cables, Raising Security Alarms
New York Man Arrested After On-Air Confession to 2017 Parents’ Murders
U.S. Defense Chief Orders Sudden Summit of Hundreds of Generals and Admirals
Global Cruise Industry Posts Dramatic Comeback with 34.6 Million Passengers in 2024
Trump Claims FBI Planted 274 Agents at Capitol Riot, Citing Unverified Reports
India: Internet Suspended in Bareilly Amid Communal Clashes Between Muslims and Hindus
Supreme Court Extends Freeze on Nearly $5 Billion in U.S. Foreign Aid at Trump’s Request
Archaeologists Recover Statues and Temples from 2,000-Year-Old Sunken City off Alexandria
China Deploys 2,000 Workers to Spain to Build Major EV Battery Factory, Raising European Dependence
Speed Takes Over: How Drive-Through Coffee Chains Are Rewriting U.S. Coffee Culture
U.S. Demands Brussels Scrutinize Digital Rules to Prevent Bias Against American Tech
Ringo Starr Champions Enduring Beatles Legacy While Debuting Las Vegas Art Show
Private Equity’s Fundraising Surge Triggers Concern of European Market Shake-Out
Colombian President Petro Vows to Mobilize Volunteers for Gaza and Joins List of Fighters
FBI Removes Agents Who Kneeled at 2020 Protest, Citing Breach of Professional Conduct
Trump Alleges ‘Triple Sabotage’ at United Nations After Escalator and Teleprompter Failures
Shock in France: 5 Years in Prison for Former President Nicolas Sarkozy
Tokyo’s Jimbōchō Named World’s Coolest Neighbourhood for 2025
European Officials Fear Trump May Shift Blame for Ukraine War onto EU
BNP Paribas Abandons Ban on 'Controversial Weapons' Financing Amid Europe’s Defence Push
Typhoon Ragasa Leaves Trail of Destruction Across East Asia Before Making Landfall in China
The Personality Rights Challenge in India’s AI Era
Big Banks Rebuild in Hong Kong as Deal Volume Surges
Italy Considers Freezing Retirement Age at 67 to Avert Scheduled Hike
Italian City to Impose Tax on Visiting Dogs Starting in 2026
Arnault Denounces Proposed Wealth Tax as Threat to French Economy
Study Finds No Safe Level of Alcohol for Dementia Risk
Denmark Investigates Drone Incursion, Does Not Rule Out Russian Involvement
Lilly CEO Warns UK Is ‘Worst Country in Europe’ for Drug Prices, Pulls Back Investment
Nigel Farage Emerges as Central Force in British Politics with Reform UK Surge
Disney Reinstates ‘Jimmy Kimmel Live!’ after Six-Day Suspension over Charlie Kirk Comments
U.S. Prosecutors Move to Break Up Google’s Advertising Monopoly
Nvidia Pledges Up to $100 Billion Investment in OpenAI to Power Massive AI Data Center Build-Out
U.S. Signals ‘Large and Forceful’ Support for Argentina Amid Market Turmoil
Nvidia and Abu Dhabi’s TII Launch First AI-&-Robotics Lab in the Middle East
Vietnam Faces Up to $25 Billion Export Loss as U.S. Tariffs Bite
Europe Signals Stronger Support for Taiwan at Major Taipei Defence Show
Indonesia Court Upholds Military Law Amid Concerns Over Expanded Civilian Role
Larry Ellison, Michael Dell and Rupert Murdoch Join Trump-Backed Bid to Take Over TikTok
Trump and Musk Reunite Publicly for First Time Since Fallout at Kirk Memorial
Vietnam Closes 86 Million Untouched Bank Accounts Over Biometric ID Rules
×