Theresa May plans Universal Credit U-turn as minister says poor Brits will be left 'worse off'

Work and Pensions Secretary Esther McVey said some of the poorest Brits in the country would be left “worse off” by the new benefits regime when it expands next year.

The PM's spokesman conceded she was "listening to concerns".

And sources last night claimed the Chancellor may now cave in to Tory pressure and cancel a planned increase in the higher rate tax allowance to pump as much as £2 billion back into Universal Credit at the Budget.

The money was taken out by former Chancellor George Osborne.

Earlier yesterday, former PM John Major warned that the nationwide roll-out of Universal Credit (UC) – which replaces six existing benefits – could prove to be Mrs May’s “poll tax” unless she spends more money.

And last night the Joseph Rowntree Foundation charity piled on the pressure by saying as many as 3.2 million ‘strivers’ could be left £50 a week worse off under UC than the old tax credits regime.

JRF chief Campbell Rob said most of these are families with children.

He stormed: “Action in the Budget this month would mean working families keep more of their earnings.”

The PM’s official spokesman yesterday insisted as much as £3 billion had been set aside to help claimants “transit” to the new benefits system over the coming years.

But Iain Duncan Smith, the architect of the scheme, is understood to be leading a campaign backed by as many as 30 MPs to demand Philip Hammond act at the Budget later this month.

Tory backbencher Johnny Mercer yesterday said the current scheme was “politically undeliverable”.

The current row was sparked at the weekend by claims Esther McVey had told the Cabinet benefit claimants would be left as much as £2,400 a year worse off when the system is rolled out nationwide.

Challenged yesterday she told the BBC: “I have said we made tough decisions and some people will be worse off. I won’t say what I said in Cabinet.


  • What is universal credit? A benefits system that wraps up six payments — Income Support, Jobseeker’s Allowance, Employment and Support Allowance, Housing Benefit, Working Tax Credit and Child Tax Credit — into one payment.
  • Why is there so much anger? Experts claim some families could be £2,400 a year worse off when the scheme is expanded next year because it cuts into work allowances put in place in 2015.
  • Hasn't Theresa May put in more cash? The Government has pledged £3billion of “transitional relief” to those migrating on to Universal Credit but this may cover only a fifth of claimants.
  • What are MPs calling for? Ex-Cabinet minister Iain Duncan Smith is leading demands for the Government to top up work allowances to reverse cuts by ex-Chancellor George Osborne.

“I had a very open conversation with my colleagues about how to support people.”

Universal Credit replaces six existing benefits – income support, income-based jobseekers allowance, income related employment and support allowance, housing benefit, working tax credit and child tax credit – with a single payment. Supporters claim it incentivises work.

The system was rolled out in pilot schemes in 2013. About 2 million people already receiving the old benefits will be moved onto UC in a “managed migration” that is not due to complete until 2023.

A Government spokesperson last night said: “We are listening to concerns about how Universal Credit supports people and constantly looking to improve the benefit".

The Sun Says

THERESA May must find the cash to help those losing out in the shift to Universal Credit.

The new scheme DOES work well for many. It is far simpler and, crucially, incentivises work. But cuts by former Chancellor George Osborne are now biting too hard. Some claimants face a severe blow to their income.

If the PM is genuinely “listening to concerns”, as she says, then good.

Voters generally back less generous benefit payments. Especially compared with the absurd levels under the last Labour Government, which fostered idleness and trapped huge numbers permanently on the dole.

But Brits are famously keen on fair play too.

They won’t support families being stripped of money through no fault of their own.


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