Ann Coffey MP has urged the government to change “unfair” Universal Credit rules, which mean that low paid workers who want to work longer hours, will only be allowed to keep a miserly 24p in every extra pound they earn.
Ms Coffey said that this was counter-productive, unfair and created a massive disincentive for people to look for ways to increase their hours and their income and work their way off benefits.
She attended a campaign meeting in the House of Commons today organised by USDAW, the shop workers’ union, which is urging the Government to change the rules.
Ms Coffey has put down an Early Day Motion calling on the government to reduce the net earnings claw back from 76 per cent to 55 per cent to ensure that extra work will always pay.
She said she was anxious that hard working people in Stockport would lose out under the plans and had met USDAW members in the Commons who will be thousands of pounds worse off under universal credit. She met one family who will be £2,500 worse off and it has been estimated that 300,000 low paid workers will lose about £3,600 when they transfer to universal credit.
Ms Coffey urged constituents to check out their Universal Credit entitlement by visiting www.entitledto.com.
Ms Coffey said:
“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 per cent 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.”
Ann Coffey’s Early Day Motion tabled on 8.4.2014
Effect of Universal Credit on full time workers
That this House believes that the claw back rate under universal credit of 65 per cent of net earnings, equal to a 76 per cent marginal deduction rate for taxpayers on universal credit will disincentives claimants from working longer hours and potential second earners from working at all, perpetuating the poverty trap for families on low pay; and 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 per cent, 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.