London Daily

Focus on the big picture.
Sunday, Jul 12, 2026

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
Government Creates Emergency Support Scheme for Financially Struggling Universities
United Kingdom Replaces Traditional Farm Subsidies With Payments Linked to Environmental Performance
National Grid Reports First Week of Electricity Generation Without Fossil Fuels
United Kingdom Financial Regulator Introduces Tougher Capital Rules for Cryptocurrency Exchanges
Belfast Harbour Expands Operations to Attract Investment Through United Kingdom and European Union Market Access
Scottish Government Threatens Legal Challenge Over Westminster Cuts to North Sea Transition Funding
United Kingdom Accelerates Trans-Pennine High-Speed Rail Project Linking Northern Cities
United Kingdom Secures Ten Billion Pound Investment for Cambridge Quantum Computing Campus
Port Talbot Steelworks Wins Support for Green Hydrogen Transition and Protection of Industrial Jobs
United Kingdom Sends Royal Navy Carrier Strike Group to Indo-Pacific as Regional Security Focus Expands
National Health Service Expands Artificial Intelligence Diagnostics Across England to Reduce Screening Backlogs
United Kingdom Launches Fifty Billion Pound Infrastructure Fund to Accelerate Housing and Construction
UK Medical Chiefs Update Health Guidance to Promote Everyday Physical Activity
Office of Communications Keeps Wikipedia Under Review Under UK Online Safety Rules
UK Defence Ministry Expands Deep-Strike Capability Through Precision Missile Programme
Russell Group Universities Warn Funding Cuts Could Damage NHS Workforce Training
UK Parliament Calls for National Emergency Broadcast as Heatwave Conditions Intensify
UK and Netherlands Strengthen Naval Cooperation With New Amphibious Defence Partnership
UK Defence Ministry Joins International Missile Programme With One Hundred and Ninety Million Pound Investment
Bank of England Warns Middle East Conflict and AI Risks Could Pressure UK Economy
UK Government Introduces New Rules to Limit Foreign Influence in Political Donations
UK and France Prepare Naval Mission to Protect Shipping Through Strait of Hormuz
United States Pressures UK to Increase Defence Spending at NATO Summit
Bank of England Warns Artificial Intelligence Investment Boom Could Create Financial Stability Risks
Bank of England Begins Direct Oversight of Critical Technology Providers Supporting UK Finance
Andy Burnham Set to Become UK Prime Minister After Labour Leadership Race Clears Path to Downing Street
Scottish Fishing Industry Calls for Emergency Support Amid Rising Costs
UK Supports Stronger European Response to Russian Actions in Ukraine
Devon and Cornwall Police Release Suspect in Ann Widdecombe Murder Investigation
Scottish MPs Demand More Government Support for Fishing Industry
UK Aviation Sector Faces New Rules as Parliament Reviews Passenger Protection Reforms
King’s College London Disciplines Students Over Pro-Palestine Campus Protests
Ministry of Defence Expands Military Capabilities Through New Precision Strike Investment
United Kingdom Condemns Russian Treatment of Ukrainian Children at International Security Forum
House of Lords Reviews Civil Aviation Bill to Strengthen Passenger Rights and UK Aviation Competitiveness
UK Aerospace and Defence Industries Contribute Nearly Forty-Seven Billion Pounds to Economy
UK Government Advances Consultation on Possible Social Media Ban for Children Under Sixteen
United Kingdom Ratifies Global High Seas Treaty to Protect Marine Biodiversity
United Kingdom Joins United States Precision Strike Missile Programme With One Hundred Ninety Million Pound Investment
UK Senior NHS Doctors Vote for Further Strike Action Over Pay and Contract Disputes
BBC Leadership Resigns After Donald Trump Launches Ten Billion Dollar Defamation Lawsuit
UK Fiscal Watchdog Warns Andy Burnham Government Faces One Hundred Billion Pound Budget Challenge
The AI Invoice Shock: Layoffs Didn't Save Managers Money — They Cost Them More
Concern: Sexually Transmitted Bacterium Among Men Develops Antibiotic Resistance
Following Massive Investor Demand: SK Hynix Raises 26.5 Billion Dollars on Nasdaq
Passenger Partially Pulled Out of Ryanair Jet After Cabin Window Fails Mid-Flight
After Four Years, and Under a Heavy Veil of Secrecy: King Charles Meets His Grandchildren, Harry and Meghan's Children
Cross-Party MPs Call for National Climate Emergency Broadcast
Bayeux Tapestry Arrives in the United Kingdom for Landmark Exhibition
United Kingdom Launches Modern Slavery Prevention Programme in Vietnam
×