Nick Smith MP

Working for you in Blaenau Gwent

Government must think again on the Universal Credit claw-back

Nick Smith MP has backed Usdaw’s campaign to stop the Universal Credit disincentive to work

He joined Usdaw activists on their campaign to persuade the Government to change Universal Credit rules.

The current plans mean working people will only be allowed to keep 24p in every extra pound they earn.

The Blaenau Gwent MP met with a delegation of hard-working families at the House of Commons who will be hurt by the changes.

Speaking after the meeting, Mr Smith said he was joining the call on the Government to make sure extra work always pays.

Mr Smith says: “Usdaw are right to highlight this problem with the Government’s Universal Credit and I hope Ministers will listen and act before the scheme is fully rolled out.

“Many working people will be clobbered by this 76% marginal deduction rate for taxpayers on Universal Credit. That will put off claimants from working longer hours and potential second earners from working at all, perpetuating the poverty trap for families on low pay.

“I was shocked to meet Usdaw members who will be thousands of pounds worse off under Universal Credit, and concerned that thousands of my hard-working constituents would also lose out under the Government’s current plans. I want to hear from people in Blaenau Gwent about how they will be affected.

Usdaw General Secretary John Hannett believes that the huge 76% claw-back of additional earnings from workers on Universal Credit is unfair and a massive disincentive for people to look for ways to increase their income and work their way off benefits altogether.

He said: “We are grateful for the support of Nick Smith  MP. Whilst Universal Credit affects households differently, many of our members working long hours are going to be worse off when they are transferred onto Universal Credit.

That loss of income is compounded because they will find it incredibly difficult to make up the shortfall by working longer hours. That is why the claw-back from additional earnings is incredibly unfair, trapping households in poverty and creating a disincentive to work. So we want the Government to ensure that work does pay by lowering the claw-back to 55p in the pound.”

You can check out your Universal Credit entitlement by visiting www.entitledto.com

Usdaw (Union of Shop, Distributive and Allied Workers) is the UK's fourth biggest and the fastest growing trade union with over 431,000 members. Membership has increased by more than 17% in the last five years and by nearly a third in the last decade. Most Usdaw members work in the retail sector, but the Union also has many members in transport, distribution, food manufacturing, chemicals and other trades.

 
Usdaw members attending the House of Commons event, 9 April 2014:

Carrie Fineran and her husband live with their two daughters, aged 14 and 11 on the Isle of Wight. Carrie’s husband works full-time for 40 hours a week and Carrie works for 13 hours per week at a local supermarket, earning just over the minimum wage.  They own their own home. They currently receive Child Tax Credit of £49 per week.  Under Universal Credit, when their transitional protection ends, this would be reduced to just £31 per week – a reduction of £943 per year, triggered by any change of circumstances such as a change in income, a different job, long-term illness or one of their children leaving education. The family may also be affected by the reduction in the disabled child element of Universal Credit.  As their elder daughter has a long-term illness, Carrie has been advised to claim Disability Living Allowance and is in the process of doing this.  If the claim is allowed, they will also be entitled to the disabled child element of Child Tax Credit, which is an extra £60 per week.  Under Universal Credit, the disabled child element is less than half at just £28.50 per week. In this case, the family would lose over £2,500 when they transferred to Universal Credit.

Mark Payne and his partner Agnes live with their three children, aged 11, 9 and 2 in Port Glasgow. Mark is a driver for one of the large supermarket chain’s home delivery service.  He works full-time and earns just under £14,000 a year.  Agnes works 11.5 hours at a local supermarket each week where she earns £7.28 per hour. They currently receive Child Tax Credit of £180 per week.  Under Universal Credit, this would be reduced by £12.80 a week – a reduction of £665.47 per year. A reduction in their annual income of £665 is going to have a significant impact on their family budget which is already stretched.

Sam Day and her husband Derek live in Bordon, Hampshire, with their 2 children, aged 8 and 4. Derek normally works full-time – 38 hours per week, packing oncology drugs.  Sam works 22 hours per week in a local supermarket. They are currently entitled to Child Tax Credit of £55 per week - £2,870 per year.  Under Universal Credit, this would be reduced by nearly £1,800 to just £1,100 or £21 per week.

Early Day Motion: The effect of Universal Credit on Full-Time Workers

That this House believes that the claw-back rate under Universal Credit of 65% of net earnings, equal to a 76% marginal deduction rate for taxpayers on Universal Credit will disincentivise claimants from working longer hours and potential second earners from working at all, perpetuating the poverty trap for families on low pay; therefore whilst supporting the principle of Universal Credit which will make it easier for people who are unemployed to move into some work, calls on the Government to reduce the net earnings claw-back to 55%, as originally proposed by the Centre for Social Justice, to ensure that the aims of Universal Credit are fulfilled so that extra work will always pay and to support hard working families.

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