Restore Work Allowance to original levels

During the Coalition government I supported the concept of Universal Credit (UC) as all the political parties did at the time because, at its heart, was the fundamental principle of making work pay.

Friday, 14th September 2018, 8:00 am
Stephen Lloyd MP for Eastbourne

The new benefits focus on employment, described by the OECD as being better than a basic income, as it “would consistently improve work incentives” was vital to me and others. A crucial part of this incentive was the Work Allowance. This is the maximum amount a UC claimant can earn through employment, before their benefit payments are reduced. However in the summer 2015 budget, with the Lib Dems no longer in government and unable to keep the Tories in check, the then Chancellor, George Osborne, tore the Work Allowance element to shreds – to the tune of £3 billion a year.

These savage reductions in the amount of money a UC claimant can earn before their benefits are reduced has adversely affected almost all in-work UC households. Research from the House of Commons library has shown for instance that some families have been made worse off by as much as £4,849 per year, a huge amount of money if you are on a low income. To put that into perspective, the tax-free Personal Allowance threshold is £11,800, above which the income tax rate is 20 per cent, rising to 40 per cent and eventually a maximum of 45 per cent at the very top end. Meanwhile a UC claimant earning just £2,376 (if UC includes housing costs) will lose 63 per cent of their earnings above that amount, or put another way, they’ll pay back almost two thirds of their salary. A staggering sum and obviously a clear disincentive to work. In short, someone with a job earning £100,000 per annum - a junior minister in the government perhaps - will pay 40 per cent in income tax, while a UC claimant pays over half as much again on top. Furthermore research by the Resolution Foundation shows that a single parent could increase their hours from 10 to 22 per week, yet retain less than £40 extra in their pay packet. Why would anyone be attracted to doubling their work rate for an increase of just over £3 per hour?

This absurd situation has ensured that the core aim of UC to encourage people off benefits into paid work – by allowing them to retain enough of their benefits so that it makes sense to work - has evaporated. The original objective of introducing a policy which would break, once and for all, the cruel cycle of welfare dependency and poverty was ruined at a stroke. This isn’t just bad policy, it’s downright stupid. That is why this week I submitted an Early Day Motion to Parliament calling on the government to restore the Work Allowance to its original levels. I’m aware that some Conservative MPs have begun to publicly acknowledge the dreadful consequences of the Work Allowance cuts made in 2015, so this is an opportunity for them to clear their consciences before the current Chancellor Philip Hammond presents his Autumn Budget. In my opinion he must reinstate the allowance before it’s too late and the national rollout of UC accelerates next year. If he fails to do so Universal Credit will continue to cause nothing but grief, pain and anger for our poorest citizens in Eastbourne and across the nation. And if that happens my question to the government would be very straightforward - what’s the point of Universal Credit?

I was delighted to welcome Eastbourne and Willingdon’s splendid NHS retirement fellowship group to Parliament this week. Herald readers; if you are constituents and you’d like to visit please do let me know. I’m always hugely keen to get people in (of all ages) so that they can enjoy the history - good and not so good - which pervades Westminster. We are an ancient country and in many ways Parliament encapsulates so much of our past, present and, yes, our future. It’s also an important reminder that Parliament is supposed to work “for you” something I will never ever forget so long as I’m privileged to be your MP. Ping me an email if you’d like to visit - to: [email protected]

I thoroughly enjoyed a recent trip to the Bell Tower at All Saints’ Church in Meads to meet its team of bellringers. Learning the history of the bells and of the restoration project was absolutely fascinating. It’s always seemed to me such a quintessential British thing so it was tremendous to see up close just how it all works. And I do so oversee the bells need restoring, they’re well over 125 years old, so watch this space as I am keen to help them raise the necessary funds. For info go online to : Thank you David Leworthy who allowed me to ring a bell a couple of times (its noisy up close) and to all the others for making me so welcome. Appreciated.

It was great fun to attend the 30th birthday celebration of the well known local restaurant, Mr Hau’s, at Eastbourne Town Hall. Elvis Hau, the founder, is a popular man who also, as you can tell by his first name, is a big fan of the King of rock and roll. And the Elvis impersonator he’d booked for the night ensured we all enjoyed a thoroughly happy and foot-tapping occasion. Congratulations Mr Hau - and thank you for the many years of pleasure you and your restaurant have given us all in Eastbourne and beyond.

That’s it folks. Have a great weekend and I hope to see you around town.