Stealth cuts to universal credit will hit the working poor

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Few things in politics are certain, but certain policy announcements elicit a predictable media response. Tinker with the tax treatment of the elderly and prepare to be accused of imposing a “granny tax”. Or, more hopefully for the coalition, increase the generosity of the personal tax allowance and read about “tax cuts for low earners”.

So here’s another one: stealth cuts in the support for the working poor receive scant media interest. At least that seemed to be the lesson last week when the autumn statement confirmed a further £600m raid on the troubled universal credit – a move that didn’t cause a ripple.

You won’t have read about this, even in a week when universal credit has barely been out of the papers. True, the Treasury buried it in the small print. But that’s par for the course. Something tells me that if there had been a similarly sized tax hike on the rich you’d probably know about it by now.

The unwelcome news comes mainly in the form of a cash freeze in the amount that households will be able to earn – their “work allowance” – before they start seeing their universal credit withdrawn. The principle is similar to that of the personal tax allowance, except for those on universal credit (UC) this work allowance is of dramatically greater consequence: everything above it is taxed at least 65p in the pound.

The decision to erode the value of the work allowance year on year rather than uprate it with inflation is going to hit four out of five of the 4 million working families expected to be on UC. The size of the loss will vary with family circumstance – homeowners are more affected than renters – but a single parent will be up to £420 worse off in 2017. For a couple with children it will be £230. The figures will be larger if inflation is higher than projected – the poor now shoulder that risk.

Doubtless some will say these are trifling sums. Well, it won’t feel like that to a family living off less than £20k and whose wages and tax credits have already plummeted. Nor should it be seen in isolation – it’s just one of many cuts to have hit the working poor. First up was the reduction in childcare support. Then working tax credits were frozen while inflation soared to 5%. Support for those working part-time was next in line. Cuts to council tax benefit – oddly excluded from universal credit – followed. And let’s not forget that this autumn’s hit to the working poor comes on top of last year’s decision to uprate tax credits by only 1%. It’s a cut on top of a cut.

The result will be further downward pressure on living standards in an era defined by working poverty. It’s also a reduction in the incentive to work and another blow to the initial goals of universal credit. Indeed, it’s pretty much at odds with much of what the government says it believes in. After all, allowing those in work to keep a larger stretch of income before the state sees fit to withhold some of it is supposed to be a governing lodestar. It seems that this logic doesn’t extend to working families who rely on tax credits to survive.

Little of this is reflected in the current debate on universal credit, which is all about delivery deadlines and dodgy IT contracts. Given the recent slippage in the timetable, perhaps this focus is inevitable – though I’d far rather have a policy delayed and sensibly introduced by 2020 than one that is at risk of falling over in 2017.

But this debate misses the underlying policy choices that are affecting UC. What started as a laudable if ambitious simplification of the welfare system has since been undermined by a toxic mix of hyperbole about what it will achieve, predictable IT bungling and, crucially, a series of stealth cuts that are changing the policy’s character in advance of it coming to fruition. The last of these problems is actually the most important. It’s time more people noticed.

This article originally appeared in The Guardian