Low-paid working couples who receive benefits and whose children have left home will be denied a pay boost by the Chancellor, UNISON said today (Wednesday).
Childless people on universal credit will be losers too despite the increase announced in yesterday’s Budget to the work allowance – the monthly amount employees can keep before their benefits are affected.
Only those with disabilities, or parents with current responsibilities for children, will be eligible for the work allowance rise, in a move described by UNISON as ‘underhand’.
Around two thirds of current universal credit claimants needing support with housing costs will be affected*, according to UNISON. It means they will hardly gain at all from the national minimum wage rise, which is to go up from £7.83 an hour to £8.21 next April.
Instead, nearly their entire annual pay rise – now worth more than £3,000 a year – will go straight into Treasury coffers. A tiny proportion – less than 10% – of this hard-earned money will end up in their pay packets despite rising rents, says UNISON.
UNISON general secretary Dave Prentis said: “Philip Hammond hasn’t gone far enough. He needs to help people and couples without children too and those whose families have left home.
“If the Chancellor wants to support the poorest, he needs to increase work allowances for everyone.”
Notes to editors:
-*This is based on June 2018 calculations.
-The work allowance for working couples on universal credit with grown up children and childless people was £111 a month. However, it was cut to zero in April 2016 and has not been increased in the Budget.
-People without children and couples whose children have left home, who need help with housing costs, will see their annual pay rise from £11,830 a year (April 2015) to £14,942 a year (April 2019). But they will only keep £305.68 of this rise based on one earner on the national minimum wage working 35 hours a week.
-The latest figures show than 1.2 million people are now on universal credit. That figure is expected to rise 3 million by the end of 2019. It will eventually reach between 7 and 8 million when it is fully rolled out.
-Former chancellor George Osborne reduced work allowances in the July 2015 Budget for those on universal credit.
-Universal credit payments go down at a current rate of 63p for every £1 of earnings.
-The impact of a zero increase in the work allowance on the pay of someone on the minimum wage getting a £100 a month rise would be a £20 rise in tax, a £12 increase in national insurance, and a £42.84 cut in universal credit. They would receive just £25.16 of their £100 a month increase, with the rest going back to the Treasury, according to UNISON calculations.