Thérèse Coffey, the work and pensions secretary, has been accused of not understanding the Universal Credit system – after she claimed people set to lose £20 a week in payments next month would have to work just two hours extra to make it up.
Welfare experts assessed that some would need to work closer to an extra nine hours a week to make up for the cut, and Labour branded Coffey’s remarks an “insult to hard-working families”.
She was speaking as the government faces growing calls to keep the extra money in place amid concern that the plans will heap further pressure on struggling families.
Further scrutiny was piled on Coffey, after it was pointed out that she claimed more than £201,000 in parliamentary expenses between 2019 and 2020, according to figures from the Independent Parliamentary Standards Authority (IPSA).
Taxpayers reimbursed the Suffolk Coastal MP for £201,278.38, as she worked to end the Universal Credit uplift on which many families have relied during the pandemic.
Speaking about the cut on Monday, Coffey told BBC Breakfast: “I’m conscious that £20 a week is about two hours’ extra work every week – we will be seeing what we can do to help people perhaps secure those extra hours, but ideally also to make sure they’re also in a place to get better paid jobs as well.”
But the Resolution Foundation contradicted her remarks due to the taper rate meaning that – over their work allowance – Universal Credit claimants only take home 37p per extra pound earned due to a lower benefit award, a figure that falls to 25p if they earn enough to pay tax and National Insurance.
The think-tank’s analysis cited the example of a Universal Credit claimant earning the national living wage and making an income of at least £6,100 a year.
They would see their take-home pay fall to £2.24 an hour once taxes, National Insurance, pension contributions or additional childcare or travel costs are taken into account.
This means they would have to work an extra nine hours a week to make up for the loss.
The analysis also noted that more than one in four Universal Credit claimants are not expected to work due to health problems or they are caring for a young child.
‘This is a lie’
Labour deputy leader Angela Rayner said: “This is a lie and the work and pensions secretary either knows she’s lying or shouldn’t be in the job.”
But a government spokesman said: “Many claimants are eligible for an in-work allowance, which means that the taper rate does not apply and people keep more of what they earn.
“For the lowest earners working two hours more per week at National Living Wage can add up to around £20.”
The Resolution Foundation’s principal economist, Adam Corlett, said: “The government has tried to justify the coming cut to Universal Credit – and the huge income loss facing millions of households – by saying that it can easily be offset by simply working a few more hours. If only it were that simple.
“A small increase in working hours will be nowhere near enough to cover the £20-a-week cut coming their way in just one month’s time.
“Given the scale of losses coming to millions of low and-middle income households this autumn at the same time as bills are rising, the Chancellor should change course on Universal Credit.”