London Daily

Focus on the big picture.
Saturday, May 31, 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
Satirical Sketch Sparks Political Spouse Feud in South Korea
Indonesia Quarry Collapse Leaves Multiple Dead and Missing
South Korean Election Video Pulled Amid Misogyny Outcry
Asian Economies Shift Away from US Dollar Amid Trade Tensions
Netflix Investigates Allegations of On-Set Mistreatment in K-Drama Production
US Defence Chief Reaffirms Strong Ties with Singapore Amid Regional Tensions
Vietnam Faces Strategic Dilemma Over China's Mekong River Projects
Malaysia's First AI Preacher Sparks Debate on Islamic Principles
White House Press Secretary Criticizes Harvard Funding, Advocates for Vocational Training
France to Implement Nationwide Smoking Ban in Outdoor Spaces Frequented by Children
Meta and Anduril Collaborate on AI-Driven Military Augmented Reality Systems
Russia's Fossil Fuel Revenues Approach €900 Billion Since Ukraine Invasion
U.S. Justice Department Reduces American Bar Association's Role in Judicial Nominations
U.S. Department of Energy Unveils 'Doudna' Supercomputer to Advance AI Research
U.S. SEC Dismisses Lawsuit Against Binance Amid Regulatory Shift
Alcohol Industry Faces Increased Scrutiny Amid Health Concerns
Italy Faces Population Decline Amid Youth Emigration
U.S. Goods Imports Plunge Nearly 20% Amid Tariff Disruptions
OpenAI Faces Competition from Cheaper AI Rivals
Foreign Tax Provision in U.S. Budget Bill Alarms Investors
Trump Accuses China of Violating Trade Agreement
Gerry Adams Wins Libel Case Against BBC
Russia Accuses Serbia of Supplying Arms to Ukraine
EU Central Bank Pushes to Replace US Dollar with Euro as World’s Main Currency
Chinese Woman Dies After Being Forced to Visit Bank Despite Critical Illness
President Trump Grants Full Pardons to Reality TV Stars Todd and Julie Chrisley
Texas Enacts App Store Accountability Act Mandating Age Verification
U.S. Health Secretary Ends Select COVID-19 Vaccine Recommendations
Vatican Calls for Sustainable Tourism in 2025 Message
Trump Warns Putin Is 'Playing with Fire' Amid Escalating Ukraine Conflict
India and Pakistan Engage Trump-Linked Lobbyists to Influence U.S. Policy
U.S. Halts New Student Visa Interviews Amid Enhanced Security Measures
Trump Administration Cancels $100 Million in Federal Contracts with Harvard
SpaceX Starship Test Flight Ends in Failure, Mars Mission Timeline Uncertain
King Charles Affirms Canadian Sovereignty Amid U.S. Statehood Pressure
Trump Threatens 25% Tariff on iPhones Amid Dispute with Apple CEO
Putin's Helicopter Reportedly Targeted by Ukrainian Drones
Liverpool Car Ramming Incident Leaves Multiple Injured
Australia Faces Immigration Debate Following Labor Party Victory
Iranian Revolutionary Guard Founder Warns Against Trusting Regime in Nuclear Talks
Macron Dismisses Viral Video of Wife's Gesture as Playful Banter
Cleveland Clinic Study Questions Effectiveness of Recent Flu Vaccine
Netanyahu Accuses Starmer of Siding with Hamas
Junior Doctors Threaten Strike Over 4% Pay Offer
Labour MPs Urge Chancellor to Tax Wealthy Over Cutting Welfare
Publication of UK Child Poverty Strategy Delayed Until Autumn
France Detains UK Fishing Vessel Amid Post-Brexit Tensions
Calls Grow to Resume Syrian Asylum Claims in UK
Nigel Farage Pledges to Reinstate Winter Fuel Payments
Boris and Carrie Johnson Welcome Daughter Poppy
×