Philip Hammond may scrap income tax cuts to pay for climbdown

Philip Hammond may scrap promised income tax cuts to pay for climbdown on Universal Credit

  • Income tax cuts designed by the Conservative government may be axed  
  • Sir John Major warned that ministers risked a poll tax-style backlash
  • Families could be up to £200 a month worse off in a Universal credit climbdown

Philip Hammond may scrap promised income tax cuts to pay for a climbdown on Universal Credit, it was reported last night.

It comes as Theresa May faces a growing Tory revolt over the rollout of Universal Credit after work and pensions secretary Esther McVey admitted it will leave some people worse off.

Conservative MPs including Iain Duncan Smith, the architect of the new benefits system, have called on the Chancellor to pump more money into the flagship welfare reform.

It was reported last night that companies working with Universal Credit claimants had been banned from criticising or harming Miss McVey’s reputation. At least 22 organisations were reported to have been required to sign gagging clauses as part of their involvement with programmes to help people back to work, according to The Times.

Philip Hammond could go back on income tax cuts to pay for Universal Credit climbdown

Former prime minister Sir John Major warned that ministers risked a poll tax-style backlash if the changes were seen as unfair. There are now suggestions Mr Hammond may scrap a key manifesto pledge to raise the personal allowance for income tax.

The Tories promised to increase the level at which workers start paying income tax from £11,800 to £12,500 by 2020. The higher rate income tax threshold was supposed to rise from £46,351 to £50,000 over the same period.

The Daily Telegraph reported that the pledge would be scrapped to put more money into universal credit. A Treasury spokesman said the story was speculation.

Universal Credit combines six benefits into one monthly payment. It is designed to make the welfare system less complicated and ensure that no-one faces a situation where they would be better off claiming benefits than working.


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But according to reports, millions of families could be left up to £200 a month worse off. Sir John warned that universal credit could hurt Mrs May in the same way as the poll tax damaged Margaret Thatcher in 1989.

Miss McVey said the reforms made it easier for people to get back into work, but admitted some people could be worse off. She added: ‘As somebody who knows more about Universal Credit than John Major, I will tell you what universal credit is doing – for the vast majority of people, it is working much better than the old system.’

Britain’s Chancellor of the Exchequer Philip Hammond promised to increase the level at which workers start paying income tax from £11,800 to £12,500 by 2020

Miss McVey declined to confirm claims she had told Cabinet colleagues that some claimants would lose out to the tune of £200 a month.

Tory MP Johnny Mercer said universal credit was ‘politically undeliverable’.

A Government spokesman said last night: ‘Universal Credit is based on the sound principles that work should always pay and those who need support receive it. We are listening to concerns about achieving these principles.’

The Department for Work and Pensions said: ‘It’s completely untrue to suggest that organisations are banned from criticising Universal Credit.’

 

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