Labour is set to commit to reducing the rate benefits are scaled back by for claimants in work in a bid to boost the incomes of the lowest-paid households in Britain.
Speaking to The Independent, the shadow work and pensions secretary Jonathan Reynolds said the party would slash the taper rate of universal credit payments if it forms the next government.
In a speech on Monday, the Labour frontbencher will also vow to use “every tool” at the party’s disposal to prevent an imminent cut in universal credit payments, including an attempt to force a vote when the Commons returns.
Iain Duncan Smith, the former Conservative cabinet minister who introduced universal credit, has previously urged ministers to lower the taper rate – a system that gradually reduces benefits as hours at work increase.
Under the current taper rate of 63 per cent, for every ￡1 earned over a work allowance, payments are automatically reduced by 63p — in addition to any income tax or national insurance due.
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Labour said that a single parent working 30 hours a week under the current system loses ￡573 a month of their universal credit entitlement, “making their effective marginal tax rate 75 per cent”.
Describing in-work poverty as one of the biggest issues facing the country, Mr Reynolds said reducing the rate would allow people to keep more of the money they earn.
However, he declined to provide a “specific figure” on what Labour would reduce the taper rate too, adding: “Obviously we’ve got to look at the economic conditions around the election.”
The party, which has previously committed to scrapping the universal credit system, is yet to outline plans on a replacement but Mr Reynolds said: “I am very clear that in terms of replacing universal credit, this bit about how it interacts with low-paid work has to be a major bit of reform.”
It comes as controversy has emerged over the government’s decision to remove the ￡20-per-week uplift in universal credit, which was introduced at the start of the Covid-19 pandemic to alleviate financial pressures on some families.
Despite repeated calls from anti-poverty campaigners, cross-party MPs, including Conservatives in northern constituencies and former cabinet ministers, Boris Johnson and Rishi Sunak have resisted pressure to extend the increase.
Last month, the prime minister’s former homelessness adviser, Dame Louise Casey, told The Independent it would be an “unnecessary evil” to cut the benefit, warning it would lead to increased reliance on food banks in winter.
On Monday, Mr Reynolds will make another appeal to backbench Conservative MPs to oppose the government cut — that is, if Labour is successful in its bid to force the issue to a vote in the Commons.
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“When parliament returns, we will be fighting this cut with every tool at our disposal. Will Conservative MPs stand up to the chancellor and prime minister and defeat this cut?” he will say.
“Or will they let the government spend money on handing out dodgy contracts to their mates and pub landlords while cutting the incomes of millions of working families?”