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Scrap £3.4bn Universal Credit cuts, urges Iain Duncan Smith

Published 28/10/2016

Iain Duncan Smith introduced Universal Credit when he was work and pensions secretary
Iain Duncan Smith introduced Universal Credit when he was work and pensions secretary

Former work and pensions secretary Iain Duncan Smith has called on Prime Minister Theresa May to scrap £3.4 billion of cuts to Universal Credit.

Mr Duncan Smith, who resigned from the Cabinet days after the Budget in protest at cuts to disability allowances, said the move would help people back into work.

The Centre for Social Justice (CSJ), a think tank chaired by the former minister, released a report in which it says three million claimants of Universal Credit will be £1,000 a year poorer by the time the scheme has fully replaced working tax credits in 2022.

In 2015, cuts to the Universal Credit "work allowance" were announced - reducing the amount people could earn before benefit payments were withdrawn.

Just 25% of spending to increase the income personal tax allowance reaches those needing it most, Mr Duncan Smith said.

"One of the key elements as you cross into work, the work allowances, those were all reduced. The problem with that is it means it is more difficult to get people into work and keep them in work.

"We want to get people into work, we want them to progress through work, but most importantly, we want to make sure work always pays," he told the BBC.

Mr Duncan Smith is one of the main architects of Universal Credit, and insists that restoring its original work allowances in the Autumn Statement on November 23 would "help those who are just about managing to properly provide for themselves and their families".

The CSJ argues that strengthening the work allowance will help people find work and those in relatively low-paid work will be better supported.

Mr Duncan Smith introduced Universal Credit as part of reforms to combine the income-based employment support allowance, income support, child tax credit, working tax credits and housing benefit.

George Osborne announced a reduction to the Universal Credit "work allowance" in the 2015 Budget and revealed further cuts to welfare spending in the 2016 Budget.

When he dramatically resigned his post days later, Mr Duncan Smith accused the now ex-chancellor and former prime minister David Cameron of chasing an "arbitrary" spending cap by focusing cuts on those who "can less afford to have that fall on them".

During his tenure at the Department for Work and Pensions, he said an expected 300,000 more people would find work under the scheme prior to it being cut.

Downing Street said there were no plans to scrap the cuts.

A No 10 spokesman told a Westminster briefing: "In terms of the Universal Credit, there are no plans to revisit this.

"The current system is working, it is having a transformative effect on people's lives.

"We are seeing claimants moving into work faster and they are staying in work longer than they were before."

Shadow work and pensions secretary Debbie Abrahams said: "Even the man who introduced the Tories' cruel and ineffective social security reforms is backing Labour's call for the Government to reverse these nasty cuts to work incentives in the social security system.

"The Tories claimed they wanted to make work pay, but then slashed the budget of Universal Credit, leaving 2.5 million working families on average £2,100 worse off.

"Labour is calling for the full reversal of these damaging cuts, to restore the principle that work always pays."

Press Association

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