Question to the HM Treasury:

To ask the Chancellor of the Exchequer, pursuant to the Answer of 20 October 2021 to Question 56619 on Universal Credit, whether his Department has made a comparative assessment of the potential effect on public finances of an (a) increase and (b) decrease of (i) 1p, (ii) 3p and (iii) 13p per £1 to the earnings taper rate for universal credit.

Through Universal Credit, the government has designed a modern benefit system that ensures it always pays to work and withdraws support at a gradual rate as claimants move into work, replacing the old legacy system which applied effective tax rates of over 90% to lower earners in some cases.

There has been significant investment in Universal Credit in recent years, including the reduction of the Universal Credit taper rate from 65% to 63% announced at Autumn Statement 2016 and the £1,000 p.a. increase to Work Allowances announced at Autumn Budget 2018, which means working parents and people with disabilities on UC are up to £630 better off each year.