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HIGH TAX GOVERNMENT: Labour calling for government to re-think decision on Universal Credit

HIGH TAX GOVERNMENT: Labour calling for government to re-think decision on Universal Credit


A cut to Universal Credit could be avoided using “fiscal headroom the Chancellor already has”, Labour has said.

Labour’s shadow work and pensions secretary, Jonathan Reynolds, said: “This Government is already a high-tax government. And due to that, and the decision to freezer personal allowances and hike council tax combined with the much lower Government borrowing costs than expected, the projections are already coming in for the October spending review suggesting there is far more room for manoeuvre than anyone previously thought.”

He quoted from the Resolution Foundation saying: “They said this last week: ‘the Chancellor will be significantly boosted by the good news the Office for Budget Responsibility will deliver with its updated forecasts on October 27’.

“Borrowing this year is likely to come in several tens of billion pounds lower than expected, having already borrowed £26 billion less than previously forecast for the first four months of 2021.

“More importantly, if the OBR moves its forecast for the long-term scarring effect of the pandemic on the British economy, that’s currently 3% of GDP, into line with the more optimistic consensus, the Bank of England now saying just 1%, he will have a windfall that lasts possibly to the tune of £25 billion a year.”

Mr Reynolds added: “Now personally I believe the final forecast may be slightly less generous than that, but the point remains, the decision to keep the level of Universal Credit and Working Tax Credit at the level it is could be made within the fiscal headroom the Chancellor already has when the spending review takes place.”

Elsewhere, and workers should be encouraged to secure better-paid jobs in response to Government plans to cut Universal Credit, according to a Conservative former minister.

Sir Desmond Swayne told the Commons: “I am inundated every week by employers who simply cannot get workers. Should we not be seeking to raise the sights of many working people to get another better-paid job? They’re out there.”

Shadow work and pensions secretary Jonathan Reynolds said he wanted to “knock down” that argument, before adding: “Of course we should get people back into jobs but it is simply false to say the choice is between keeping the uplift and doing that.

“Let me remind the House again: Universal Credit is an in-work benefit. Almost half of the incomes that MPs opposite wish to cut are of people in work.”

Mr Reynolds also told the UC debate: “The human cost of taking this money away cannot be overstated.

“£20 might not seem like much to some people but it’s the difference between having food in the fridge and still being able to put the heating on, or being able to get their kids new school shoes without worrying how you’ll pay for it.”

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