Spending Review and Autumn Budget 2021: Universal Credit Taper Factsheet
FACTSHEET ISSUED BY HM TREASURY
The UK Government says the best way to support people’s living standards is through good work, better skills, and higher wages.
We will always give families the support they need and the tools to build a better life for themselves.
The UK’s modern Universal Credit (UC) benefit system ensures that people on the lowest wages are given the support they need to thrive and fulfil their potential.
As an incentive to find good work as the UK economy moves to a high-wage, high-productivity economy, the Government is changing the rate at which people’s UC award gradually reduces once they earn a salary – making work pay.
How does the Universal Credit Taper work?
The taper rate means that if people work more hours, their support is gradually withdrawn. It was withdrawn far more quickly in the old system.
Currently that taper rate starts at 63 pence – so for every £1, after tax, a person earns, their UC payment is reduced by 63pence.
The Government is taking decisive action to make sure work pays, and permanently cutting this taper rate by 8p from 63p to 55p, ensuring more money in people’s pockets.
Some households can earn a set amount before the taper kicks in. This is called the work allowance.
What is the Work Allowance?
Households on UC who are in work and either looking after a child or have a household member with limited capability for work are being supported with an increase in their work allowances.
This is the amount that a person can earn before support begins to be withdrawn as the taper rate kicks in.
Work allowances are currently set at £293 a month if the household receives housing support, or £515 if they do not receive housing support. These are both being increased by £500 per year.
Who is affected?
1.9 million households will benefit from these changes. For example, within five weeks, as a result of these changes:
A single mother of two, renting in Darlington, working a full-time job on the National Living Wage, will see her take-home income increase by £1,200 on an annual basis.
A couple with two children, renting their home with their two children, where one partner works full time at the National Living Wage, and the other works 16 hours a week at National Living Wage will be £1,800 per year better off.
Taken together, this is an effective £2.2bn tax cut for around 2 million of the lowest earning working families.
This applies to England, Scotland and Wales. The Northern Ireland Executive will be provided with funding to implement an equivalent measure.
Who has called for it?
the TUC:“If the aim of UC is to make work pay, the taper rate needs to be revisited’
Centre for Social Justice: “increasing work allowances would help those claimants who are highly motivated to re-enter a weakened labour market to have their incomes supported.”
Joseph Rowntree Foundation: ‘Increasing work allowances and reducing the taper rate would strengthen work incentives and help protect families on low earnings from poverty.”
Centre for Policy Studies: “The Government should implement improvements to work incentives within UC through a cut to the taper rate and increased work allowances. This is desirable in itself and would complement a broader economic programme for increased employment post-pandemic.”
When will it be introduced?
Changes like this are usually introduced at the start of the financial year in April, but in order to support families through the Winter, the reduction to the taper rate and increase to the work allowances will be implemented by the beginning of December 2021.
This builds on continued support to tackle cost of living:
We are supporting millions of workers by increasing the National Living Wage to £9.50 an hour in April 2022 from £8.91.
Young people and apprentices will also see their wages boosted as the National Minimum Wage for people aged 21-22 goes up to £9.18 an hour and the Apprentice Rate increases to £4.81 an hour.
Investing £170million in 2024-25 to increase the hourly rate to be paid to early years providers to deliver the government’s free childcare hours.
Saving consumers £3billion over the coming years on alcohol duty. The freeze will save consumers 3p off a pint of beer, 2p off a pint of cider, 14p off a 75cl bottle of wine and 52p off a 70cl bottle of Scotch.
The average driver will pay around £15 less fuel duty per tank as we freeze fuel duty for twelfth consecutive year, compared with pre-2010 plans.
Taking into account the increase in the National Living Wage, changes in Universal Credit, the freezing of the income tax Personal Allowance and the introduction of the Adult Social Care Levy:
A single parent with two children, working 16 hours a week at the National Living Wage in 2022/23 will still be around £590 better off in cash terms than if none these changes had been made.
A single earner couple with two children, working 35 hours a week at the National Living Wage in 2022/23 will still be around £1,200 better off in cash terms than if none these changes had been made.
New analysis by the independent Joseph Rowntree Foundation reveals that the rising cost of living wipes out much of the financial gain some families will receive from the Universal Credit changes announced yesterday.
Weekly incomes and Costs for 2022/23
Family 1: single adult, no children, not working
Family 2: single parent, with one young child (assume age 5), part-time 16 hours per week
Family 3: couple with two young children (assume 7 and 5). One FT worker
Family 4: single parent, with one young child (assume age 5), full-time 35 hours per week
Family 5: Couple with two young children (assume 7 and 5). 1 FT worker (35 hours), 1 PT worker (16 hours)
Weekly income before new announcements
£77
£278
£433
£333
£489
Weekly gain from taper rate and work allowance
£0
£8
£19
£19
£31
Total loss from higher cost of living due to…
-£13
-£16
-£23
-£18
-£24
1) increase in energy prices
-£7
-£7
-£7
-£7
-£7
2) overall cost of living increase
-£6
-£8
-£13
-£8
-£13
3) increase in National Insurance and impact of inflation on earnings
£0
-£1
-£3
-£3
-£4
Overall weekly gain or loss after measures and cost of living
-£13
-£8
-£4
£1
£7
Note all five families lost £20-a-week in October 2021, due to the cut in the Universal Credit Standard Allowance, so all are worse-off than they would have been in September 2021. All workers are assumed to be paid at the National Living Wage rate, so benefit from its increase.
UK Government will provide a record £41 billion per year to the Scottish Government.
Scotland will also benefit from UK-wide support for people and businesses, green jobs and investment to level up opportunities.
Targeted funding will support local projects across Scotland, including road and infrastructure improvements, investment in local communities and funding for businesses.
The Chancellor today announced Barnett-based funding for the Scottish Government of £41 billion per year – delivering the largest annual funding settlement, in real terms, since devolution over 20 years ago. This includes a £4.6 billion per year spending boost – as part of a Budget and Spending Review that delivers a stronger economy for the whole of the UK.
Rishi Sunak set out a plan to deliver the priorities of the British people by investing in stronger public services, levelling up opportunity, driving business growth and helping working families with the cost of living.
As part of the significant spending plans, Scotland will receive an average of £41 billion per year in Barnett-based funding representing a 2.4% rise in the Scottish Government’s budget each year. The Scottish Government will now receive around £126 per person for every £100 per person of equivalent UK Government spending in England.
Chancellor of the Exchequer, Rishi Sunak said: “This is a budget for the whole of the UK. We’re focused on what matters most to the British people – the health of their loved ones, access to world-class public services, jobs for the future and tackling climate change.
“By providing record funding, the Scottish Government can tackle backlogs in the NHS and ensure people in Scotland get the support they need as we recover from the pandemic.
“The UK Government continues to level up opportunities across all parts of the UK, with investments in green jobs and high-speed internet access for thousands more homes in Scotland through Project Gigabit.
Scottish Secretary, Alister Jack said: “The Budget delivers for people in Scotland, and right across the UK.
“The Scottish Government’s block grant, boosted by an additional £4.6 billion a year due to spending in England, means that the funding for the Scottish Government is the highest it has ever been.
“It demonstrates our commitment to level up right across the UK. The Budget ushers in an era of real devolution, ensuring money is spent on projects that matter most to people in Scotland.
“The UK Government made a clear commitment to maintain Scotland’s level of funding following the vote to leave the EU, and we have delivered on that promise. We are taking decisions in the UK rather than in Brussels and dealing directly with local authorities who know their communities best.
“From the Knoydart community pub, to Dumbarton town centre and the Granton Gasworks – all these projects will bring real, visible improvements for local communities. Special funding for Glasgow’s iconic Burrell Collection and Extreme E will help drive economic growth and jobs on the back of culture and tourism.
“The continuation of the freeze on spirit duty will be a boost to Scotland’s thriving whisky industry.
“Over the past 18 months the UK Government has been focused on protecting people’s livelihoods, their incomes, and their jobs. We now need to look to the future, to build a stronger economy for people in all parts of the UK.”
Targeted funding in Scotland
On top of the record funding for the Scottish Government, Scotland will benefit from the UK Government’s commitment to invest in people, jobs, communities and businesses. Targeted projects in Scotland include:
Over £200 million to be invested in Scotland to boost the post-pandemic recovery and enhance the Scottish economy, including:
£172 million of the Levelling Up Fund for 8 important projects including the redevelopment of Inverness Castle, the much-needed renovation of the Westfield Roundabout in Falkirk, and a new marketplace in Aberdeen City Centre.
Over £1.07 million of the Community Ownership Fund for five projects in Whithorn, Inverie, New Galloway, Kinloch Rannoch and Callander that are protecting valued community assets.
Providing £1.9 billion for farmers and land managers and £42.2 million to support fisheries.
Up to £1 million, to support the delivery of a ‘green’ formula E race showcasing Hebridean Green Hydrogen to a global audience.
Expanding the existing trade and investment hub in Edinburgh to grow trade for Scotland.
Up to £3 million to bring world-class art exhibitions to the Burrell Collection in the heart of Glasgow.
UK-Wide Support
As a result of our strong United Kingdom, Scotland will benefit from:
A 50% cut in domestic Air Passenger Duty for flights between England, Scotland, Wales and Northern Ireland and an additional £22.5 million of new funding in anticipation of the Union Connectivity
Review recommendations where we will work with the devolved administrations on improving UK-wide connectivity.
New funding for the British Business Bank to establish a £150 million fund in Scotland, helping Scottish businesses to get the financing they need.
The new £1.4 billion Global Britain Investment Fund which will support investment directly into Scotland.
A record £20 billion by 2024-25 in Research and Development supporting innovation in Scotland.
Confirmation that total funding will at a minimum match the size of EU Funds in Scotland, each year through the over £2.6bn UK Shared Prosperity Fund, which will invest in skills, people, businesses, and communities, including through ‘Multiply’, a new adult numeracy programme that will provide people across Scotland with essential numeracy skills.
An increase to the National Minimum Wage of £9.50 an hour, with young people and apprentices also seeing increases.
Freezes to fuel duty for the twelfth consecutive year and a freeze on Vehicle Excise Duty for heavy goods vehicles.
A freeze on alcohol duty, which will mean that whisky benefits from the lowest real terms tax rate since 1918.
BUDGET REACTION
Rachel Reeves MP, Labour’s Shadow Chancellor, responding to the Budget, said:Families struggling with the cost of living crisis, businesses hit by a supply chain crisis, those who rely on our schools and our hospitals and our police – they won’t recognise the world that the Chancellor is describing. They will think that he is living in a parallel universe.
The Chancellor in this budget, has decided to cut taxes for banks. So, Madame Deputy Speaker, at least the bankers on short haul flights sipping champagne will be cheering this budget today.
And the arrogance, after taking £6 billion out of the pockets of some of the poorest people in this country, expecting them to cheer today for £2 billion given to compensate.
In the long story of this Parliament, never has a Chancellor asked the British people to pay so much for so little.
Time and again today, the Chancellor compared the investments that he is making to the last decade. But who was in charge in this lost decade? They were.
So, let’s just reflect on the choices the Chancellor has made today – the highest sustained tax burden in peacetime.
And who is going to pay for it?
It’s not international giants like Amazon – the Chancellor has found a tax deduction for them. It’s not property speculators – they’ve already pocketed a stamp duty cut. And it’s clearly not the banks – even though bankers’ bonuses are set to hit a record high this year.
Instead, the Chancellor is loading the burden on working people. A National Insurance Tax rise – on working people. A Council Tax hike – on working people. And no support today for working people with VAT on their gas and electricity bills.
And what are working people getting in return? A record NHS waiting list, with no plan to clear it, no way to see a GP and still having to sell their home to pay for social care.
Community policing nowhere to be seen, a court backlog leaving victims without justice and almost every rape going unprosecuted.
A growing gap in results and opportunities between children at private and state schools. Soaring number of pupils in supersize classes and no serious plan to catch up on learning stolen by the virus. £2 million announced today – a pale imitation of the £15 billion catch up fund that the Prime Minister’s own education tsar said was needed. No wonder, Madame Deputy Speaker, that he resigned.
Now the Chancellor talks about world class public services. Tell that to a pensioner waiting for a hip operation. Tell that to a young woman waiting to go to court to get justice. Tell that to a mum and dad, waiting for their child the mental health support they need.
And the Chancellor says today that he has realised what a difference early years spending makes. I would just say to the Chancellor, has he ever heard of the Sure Start programme that this Tory government has cut?
And why are we in this position? Why are British businesses being stifled by debt while Amazon gets tax deductions?
Why are working people being asked to pay more tax and put up with worse services?
Why are billions of pounds in taxpayer money being funnelled to friends and donors of the Conservative party while millions of families are having £20 a week taken off them?
Madame Deputy Speaker, why can’t Britain do better than this?
The Government will always blame others. It’s business’ fault, it’s the EU’s fault, it’s the public’s fault.
The global problems, the same old excuses. But the blunt reality is this – working people are being asked to pay more for less for three simple reasons:
Economic mismanagement,
An unfair tax system,
And wasteful spending.
Each of these problems is down to 11 years of Conservative failure and they shake their heads but the cuts to our public services have cut them to the bone. And while the Chancellor and the Prime Minister like to pretend they are different, the Budget they’ve delivered today will only make things worse.
The solution starts with growth. The Government is caught in a bind of its own making. Low growth inexorably leads to less money for public services, unless taxes rise.
Under the Conservatives, Britain has become a low growth economy. Let’s look at the last decade – the Tories have grown the economy at just 1.8 percent a year.
If we had grown at the same rate as other advanced economies, we could have spent over £30bn to invest in public services without needing to raise taxes.
Let’s compare this to the last Labour Government. Even taking into account the global financial crisis, Labour grew the economy much faster – 2.3 percent a year.
If the Tories matched our record, we would have spent £30bn more on public services without needing to raise taxes.
It could not be clearer. The Conservatives are now the party of high taxation, because the Conservatives are the party of low growth.
The Office for Budget Responsibility confirmed this today – that we will be back to anaemic growth. The OBR said that by the end of this Parliament, the UK economy will be growing by just 1.3%. Which is hardly the plan for growth that the Chancellor boasted about today, hardly a ringing endorsement of his announcements.
Under the Tory decade we have had ow growth and there’s not much growth to look forward to.
The economy has been weakened by the pandemic but also by the Government’s mishandling of it.
Responding to the virus has been a huge challenge. Governments around the world have taken on debt, but our situation is worse than other countries.
Worse, because our economy was already fragile going into the crisis. Too much inequality, too much insecure work, too little resilience in our public services.
And worse, because the Prime Minister dithered and delayed, against scientific advice – egged on by the Chancellor – we ended up facing harsher and longer restrictions than other countries.
So, as well as having the highest death toll in Europe, Britain suffered the worst economic hit of any major economy.
The Chancellor now boasts that we are growing faster than others, but that’s because we fell the furthest.
And whilst the US and others have already bounced back to pre-pandemic levels, the UK hasn’t. Our economy is set to be permanently weaker.
On top of all of that, the Government is now lurching from crisis to crisis. People avoiding journeys because they can’t fill up their petrol tank is not good for the economy. People spending less because the cost of the weekly shop has exploded is not good for the economy. And British exporters facing more barriers than their European competitors because of the deal that this government did is not good for the economy.
If this were a plan, it would be economic sabotage. When the Prime Minister isn’t blagging that this chaos is part of his cunning plan, he says he’s “not worried about inflation.”
Tell that to families struggling with rising gas and electricity bills, with rising prices of petrol at the pump and with rising food prices. He’s out of touch, he’s out of ideas and he’s left working people out of pocket.
Madame Deputy Speaker, Conservative mismanagement has made the fiscal situation tight. And when times are tight it’s even more important to ensure that taxes are fair, that taxpayers get value for money. But the Government fails on both fronts.
We have a grossly unfair tax system with the burden heaped on working people.
Successive budgets have raised council tax, income tax and now National Insurance. But taxes on those with the broadest shoulders, those who earn their income from stocks, shares, and property portfolios have been left largely untouched.
Businesses based on the high street are the lifeblood of our communities and often the first venture for entrepreneurs.
But despite what the Chancellor has said today, businesses will still be held back by punitive and unfair business rates. The Government has failed to tax online giants and watered-down global efforts to create a level playing field.
And just when we need every penny of public money to make a difference, we have a government that is the by-word for waste, cronyism and vanity projects.
We’ve had £37 billion for a test and trace system that the spending watchdog says, ‘treats taxpayers like an ATM cash machine’. A yacht for ministers, a fancy paint job for the Prime Minister’s plane and a TV studio for Conservative Party broadcasts, which seems to have morphed into the world’s most expensive home cinema.
£3.5bn of Government contracts awarded to friends and donors of the Conservative Party, a £190 million loan to a company employing the PMs former Chief of Staff, £30 million to the former Health Secretary’s pub landlord. And every single one of those cheques signed by the Chancellor.
And now he comes to ordinary working people and asks them to pay more. More than they have ever been asked to pay before and at the same time, to put up with worse public services. All because of his economic mismanagement, his unfair tax system and his wasteful spending.
There are of course some welcome measures in this budget today, as there are in any budget.
Labour welcomes the increase in the National Minimum Wage, though the Government needs to go further and faster. If they had backed Labour’s position of an immediate rise to at least £10 an hour then a full-time worker on the minimum wage would be in line for an extra £1,000 a year.
Ending the punitive public sector pay freeze is welcome, but we know how much this Chancellor likes his smoke and mirrors. So, we’ll be checking the books to make sure the money is there for a real terms pay rise.
Labour also welcomes the Government’s decision to reduce the Universal Credit taper rate, as we have consistently called for. But the system has got so far out of whack that even after this reduction, working people on universal credit still face a higher marginal tax rate than the Prime Minister. And those unable to work – through no fault of their own – still face losing over £1000 a year. And for families who go out to work everyday but don’t get government benefits, on an average wage, who have to fill up their car with petrol to get to work, who do that weekly shop and who see their gas and electricity prices go up – this budget today does absolutely nothing for them.
We have a cost-of-living crisis.
The Government has no coherent plan to help families to cope with rising energy prices. Whilst we welcome the action taken today on Universal Credit, millions will struggle to pay the bills this winter.
The Government has done nothing to help people with their gas and electricity bills with that cut in VAT receipts as Labour has called for. A cut that is possible because we are outside the European Union and can be funded by the extra VAT receipts that have been experienced in the last few months.
Working people are left out in the cold while the Government hammers them with tax rises.
National Insurance is a regressive tax on working people, it is a tax on jobs.
Under the Chancellor’s plans, a landlord renting out dozens of properties won’t pay a penny more. But their tenants, in work, will face tax rises of hundreds of pounds a year. And he is failing to tackle another huge issue of the day. Adapting to climate change.
Adapting to climate change presents opportunities – more Jobs, lower bills and cleaner air. But only if we act now and at scale. According to the OBR, failure to act will mean public sector debt explodes later, to nearly 300% of GDP.
The only way to be a prudent and responsible Chancellor is to be a Green Chancellor. To invest in the transition to a zero-carbon economy and give British businesses a head-start in the industries of the future.
But with no mention of climate in his conference speech and the most passing of references today, we are burdened with a Chancellor unwilling to meet the challenges we face.
Homeowners are left to face the costs of insulation on their own, industries like steel and hydrogen are in a global race without the support they need and the Chancellor is promoting domestic flights over high speed rail int he week before COP26.
It is because of this Chancellor that in the very week we try and persuade other countries to reduce emissions, this Government can’t even confirm it will meet its 2035 climate reduction target.
Madame Deputy Speaker, everywhere working people look at the moment they see prices going up and shortages on the shelves. But this Budget did nothing to address their fears.
Household budgets are being stretched thinner than ever but this Budget did nothing to deal with the spiralling cost of living. It is a shocking missed opportunity by a government that is completely out of touch.
There is an alternative. Labour would scrap the business rates and replace it with something much better by ensuring online giants pay their fair share. That’s what being pro-business looks like.
We wouldn’t put up National Insurance for working people, we would ensure those with the broadest shoulders pay their share. That’s what being on the side of working people looks like.
We’d end the £1.7 billion subsidy the Government gives private schools and put it straight into local state schools. That’s what being on the side of working families looks like.
We’d deliver a climate investment pledge – £28bn every year for the rest of the decade. That’s Giga-factories to build batteries for electric vehicles, a thriving hydrogen industry and retrofitting, so we keep homes warm and get energy bills down. That’s what real action on climate change looks like.
This country deserves better but they’ll never get it under this Chancellor who gives with one hand but takes so much more with the other.
The truth is this – what you get with these two is a classic con game. It’s like one of those pickpocketing operations you see in crowded places. The Prime Minister is the front man – distracting people with his wild promises. All the while, his Chancellor dips his hand in their pocket. It all seems like fun and games until you walk away and realise your purse has been lifted.
But people are getting wise to them. Every month they feel the pinch. They are tired of the smoke and mirrors, of the bluster, of the false dawns, of the promises of jam tomorrow.
Labour would put working people first. We’d use the power of government and the skill of business to ensure that the next generation of quality jobs are created right here, in Britain.
We’d tax fairly, spend wisely and after a decade of faltering growth, we’d get Britain’s economy firing on all cylinders.
That is what a Labour budget would have done today.
Edinburgh Pentlands SNP MSP Gordon MacDonald said that the Tory UK Government’s budget makes it clear that “independence is the only way to give Edinburgh a fair recovery from the pandemic.”
Gordon MacDonald said that the budget, described by the head of the Institute for Fiscal Studies as “actually awful” for living standards, is failing the people of Scotland by failing to tackle the cost of living crisis, the Brexit crisis and the climate crisis whilst the Tory Government prioritise cuts to the cost of champagne and giving tax breaks to bankers.
The Edinburgh Pentlands MSP said: “What the Tory UK Government has outlined today does not meet the ambition needed to build a fair and sustainable recovery and to tackle the cost of living crisis.
“It’s painfully clear that there will be no fair recovery from the pandemic under Westminster control.
“This Tory budget fails Scotland as a whole and doesn’t go anywhere near supporting people in Edinburgh, who are being hit by an energy crisis, a Brexit crisis, labour shortages and an inflation crisis under Westminster control.
“The UK Government budget is leaving families in Edinburgh hundreds of pounds worse off next year due to Tory cuts, tax hikes and the soaring cost of Brexit.
“It’s little wonder that, in May’s election, the people of Scotland voted overwhelmingly for a different future when they gave the SNP the highest share of the vote since the dawn of devolution and a clear mandate for an independence referendum – Independence is the only way to keep Scotland safe from Tory cuts.”
“The chancellor admitted that we will have zero pay growth across the economy next year. And he has no plan to get real wages rising for everyone after an eleven year pay squeeze, with average real pay growth over the next four years predicted to be just 0.3 per cent.
“He should have announced fair pay deals for whole industries, negotiated with unions, designed to get pay and productivity rising in every sector.
“Families face a triple whammy of a £1,000 universal credit cut, tax hikes and fast-rising energy and food bills. All the while wages across the economy stand still.”
On the universal credit taper cut, she added:
“Workers on universal credit should always have been able to keep more of their wages. This change does not make up for the £1,000 per year cut to universal credit, and does not help those on universal credit who cannot work.”
Centre for Cities’ Chief Executive Andrew Carter said:“Raising the National Living Wage is a quick win for the levelling up agenda and will have the biggest impact in the places that are crucial to the Prime Minister winning the next election. Four of the five places where the most people will benefit are in the North.
“While a pay increase is good news for people struggling with the cost of living crisis, it does not address the reasons why they live on low pay in the first place: a lack of well-paid jobs in their local area.
“We’ve seen today the beginnings of a plan focused on skills, innovation and infrastructure to address this, but turning it from rhetoric to reality will depend on ministers’ willingness to work with metro mayors and councils on delivering it.
“I am now looking to the delayed Levelling Up White Paper to set out how this will happen.”
Katie Schmuecker, Deputy Director of Policy & Partnerships at JRF said:“This is a tale of two Budgets for families on low incomes.
“For those in work, the change to the taper rate and work allowance, alongside the National Living Wage increase, are very positive steps, allowing low-paid workers to keep more of what they earn. Together these measures improve our social security system for working families and demonstrate a serious intent to turn the tide on the pre-pandemic trend of rising in-work poverty.
“But the reality is that millions of people who are unable to work or looking for work will not benefit from these changes. The Chancellor’s decision to ignore them today as the cost of living rises risks deepening poverty among this group, who now have the lowest main rate of out-of-work support in real terms since around 1990.
“Among the people in our society who cannot work are cancer patients, people with disabilities and those caring for young children or elderly parents.
“Their energy bills and weekly shop are going up like everyone else’s and they face immediate hardship, hunger and debt in the months ahead. The Chancellor had an opportunity to support families on the lowest incomes to weather the storm ahead, and he did not take it.”
New analysis by the independent Joseph Rowntree Foundation reveals that the rising cost of living wipes out much of the financial gain some families will receive from the Universal Credit changes announced today.
Weekly incomes and Costs for 2022/23
Family 1: single adult, no children, not working
Family 2: single parent, with one young child (assume age 5), part-time 16 hours per week
Family 3: couple with two young children (assume 7 and 5). One FT worker
Family 4: single parent, with one young child (assume age 5), full-time 35 hours per week
Family 5: Couple with two young children (assume 7 and 5). 1 FT worker (35 hours), 1 PT worker (16 hours)
Weekly income before new announcements
£77
£278
£433
£333
£489
Weekly gain from taper rate and work allowance
£0
£8
£19
£19
£31
Total loss from higher cost of living due to…
-£13
-£16
-£23
-£18
-£24
1) increase in energy prices
-£7
-£7
-£7
-£7
-£7
2) overall cost of living increase
-£6
-£8
-£13
-£8
-£13
3) increase in National Insurance and impact of inflation on earnings
£0
-£1
-£3
-£3
-£4
Overall weekly gain or loss after measures and cost of living
-£13
-£8
-£4
£1
£7
Note all five families lost £20-a-week in October 2021, due to the cut in the Universal Credit Standard Allowance, so all are worse-off than they would have been in September 2021. All workers are assumed to be paid at the National Living Wage rate, so benefit from its increase.
Peter Kelly,Director of the Poverty Alliance, said: “It is a shameful, unjust decision that makes the Chancellor’s rhetoric about ‘levelling up’ seem as empty as the pockets of the hundreds of thousands of people swept into poverty as a result.”
There have been reports of people being forced back to workplaces without proper consultation, even as Covid-19 cases remain high, or forced to stay at home due to money-saving office closures (writes TUC’s ALICE ARKWRIGHT). Employers should consult with unions to manage this period positively – rather than issuing directives.
So, what can you do if you feel like you’re being forced to stay at home or go back into the office?
Talk to your colleagues
If your boss is asking you to return to the workplace or stay at home and you don’t feel comfortable, you should speak to other members and your union rep immediately – they may feel the same about the situation.
If you raise the issue collectively with your employer, they’re much more likely to listen. Employers shouldn’t be imposing changes on anyone. You and your colleagues should clearly lay out what you want and why it’s beneficial for both you and your employer.
There’s still limited access to childcare at the moment, so parents and carers may need specific arrangements. Your boss should be working with you and your workmates to understand this.
And suggesting pay cuts for home workers, as we’ve heard in the media, is the last thing employers should be doing. People have shown huge flexibility during the pandemic and worked hard to keep the country going – now is not the time to be making threats.
Brush up on health and safety
There are lots of factors that your employer needs to think about at this time. Primarily, health and safety – is your workplace safe to be in and has your employer considered the mental health impact of returning to the workplace?
This could include feelings of isolation with continued homeworking or anxiety about returning to the workplace. Our latest webinar provides all you need to know on health and safety at work since government restrictions were lifted.
Know your rights
You have certain rights when deciding where to work:
Employment contract
Check your employment contract. You might have a “place of work” included and, it could be a breach of contact if your employer unilaterally imposes a change of location, without consent. This is important if your employer is saying you must work from home permanently.
Safety
The virus hasn’t gone away, and workers will want to know what their employer is doing to keep them safe. It’s a legal requirement for bosses to carry out a workplace risk assessment. Employers must also carry out the actions that come from their risk assessment – this could include continuing with home working where possible.
If you think there is a serious or imminent danger to you or your colleagues, you may have the right to leave work depending on the specific circumstances. The relevant law is Section 44 of the Employment Act 1996 and it covers all employees. More information on your health and safety rights on returning to work can be found here.
And remember, your employer still has a duty to keep you safe when you’re working from home – see our guidance on risk assessments for homeworkers.
Flexible working requests
Under current law, all employees have the right to request flexible working arrangements, this can include a request to change your location either permanently or for part of your working time. Any employee can make a request, you don’t have to be a parent or carer, but you must have been in the job for 26 weeks and you can only make one request per year.
Employers have to review these requests fairly and respond within 3 months. They can turn down requests for ‘business reasons’ – but we’re campaigning for better flexible working rights for everyone.
Reasonable adjustments
Employers have a legal duty under the Equality Act 2010 to proactively make reasonable adjustments to remove, reduce or prevent any disadvantages that disabled workers face. The law recognises that to secure equality for disabled people, work may need to be structured differently, support given, and barriers removed. This can include working from home.
If you’re a disabled worker and have been working from home successfully during the pandemic, continuing to work from home could be a reasonable adjustment that your employer can provide, should you want it – but bosses must also provide reasonable adjustments in the workplace.
Right to time off in emergencies to look after children
There are huge gaps in childcare provision leaving parents without the support they need to juggle work and care. If your employer has given you short notice to return to the workplace, by law anyone classed as an employee has the right to take time off work to help someone who is dependent on them in an unexpected event.
A dependent includes children but also a partner, someone you live with or a person who relies on you to make care arrangements. If you’re looking at any of these options, talk to your union and they can support you.
Finally, if you’re not in a union, join one.
Unionised workplaces have negotiated for additional access to flexible work and support to manage care that goes way above what you get under the law.
NEW POLLING reveals the extent to which low-paid workers have borne the brunt of the pandemic
NEW POLLING reveals the extent to which low-paid workers have borne the brunt of the pandemic
TUC analysis shows three industries furthest away from recovery are all low-paid and have highest rates of furlough use
TUC warns the end of furlough and Universal Credit cut will be a hammer blow for low-paid workers
Union body says without an economic reset post-pandemic the government’s levelling up agenda will be “doomed to failure”
The coronavirus crisis has been “a tale of two pandemics”, the TUC said today as it calls for an urgent “economic reset” to tackle the huge class divide in Britain that has been exposed by the pandemic.
The call comes as the union body publishes new polling which shows how low-income workers have borne the brunt of the pandemic with little or no option to work from home, no or low sick pay and reduced living standards, while better-off workers have enjoyed greater flexibility with work, financial stability and increased spending power.
Pandemic class divide
New TUC polling, conducted by Britain Thinks, has revealed the extent of the pandemic class divide with the high-paid more financially comfortable than before, while the low-paid have been thrust into financial difficulty:
Low-paid workers (those earning less than £15,000) are almost twice as likely as high-paid workers (those earning more than £50,000) to say they have cut back on spending since the pandemic began (28 per cent compared to 16 per cent)
High earners are more than three times likely than low-paid workers to expect to receive a pay rise in the next 12 months (37 per cent compared to 12 per cent).
This Covid class divide isn’t just apparent on personal finances. The polling also shows how low-paid workers are markedly more likely to get low or no sick pay compared to higher earners:
Low-paid workers are four times more likely than high-paid workers to say they cannot afford to take time off work when sick (24 per cent compared to six per cent).
Only a third (35 per cent) of low-paid workers say they get full pay when off sick compared to an overwhelming majority of high-paid workers (80 per cent)
The TUC has long been calling for an increase to statutory sick pay, which stands at a derisory £96.35 a week, and from which more than two million low-paid workers – mostly women – are currently excluded because they do not earn enough to qualify.
The union body recently criticised the government decision to “abandon” these two million workers by failing to expand eligibility of sick pay, as they had previously promised.
This lack of decent sick pay is compounded by the fact that low-paid workers are more than three times more likely than high-paid workers to say they their job means they can only work outside the home (74 per cent compared to 20 per cent).
This means that low-paid workers face greater risk of contracting the virus at work, and when ill, often face the impossible choice of doing the right thing but losing income or keeping full pay but potentially spreading the virus.
Low-paid industries lag
New TUC analysis shows that the three industries furthest away from a jobs recovery – arts and entertainment, accommodation and food and ‘other services’ – are all ‘low paid’ industries.
These are also the three industries with the highest furlough rates according to HMRC stats, and three of the highest according to most recent ONS estimate.
The end of furlough poses a serious threat to low-paid jobs in these industries – and combined with the “senseless” Universal Credit cut – will be a hammer blow for low-paid workers and push many further into hardship, the union body says.
Time for an economic reset
The TUC says its analysis and poll findings paint a picture of stark inequality in the UK, which has been further entrenched through the coronavirus crisis, and show that the country needs an urgent “economic reset” post-pandemic.
The union body warns that without such a reset, the government’s levelling up agenda will be “doomed to failure” as ministers risk repeating the same mistakes which followed the financial crisis, allowing insecure work to spiral even further.
To prevent unnecessary hardship in the coming months, the TUC is calling on the government to:
Extend the furlough scheme for as long as is needed to protect jobs and livelihoods and put in place a permanent short-time working scheme to protect workers at times of economic change
Cancel the planned £20 cut to Universal Credit
And as part of a post-pandemic reset, the TUC says ministers must:
Ban zero hours contracts
Raise the minimum wage immediately to at least £10
Increase statutory sick pay to a real Living Wage and make it available to all
Introduce new rights for workers to bargain for better pay and conditions through their unions
TUC General Secretary Frances O’Grady said: “Everyone deserves dignity at work and a job they can build a life on. But too many working people – often key workers – are struggling to pay the bills and put food on the table.
“It has been a tale of two pandemics. This Covid class divide has seen low-paid workers bear the brunt of the pandemic, while the better off have enjoyed greater financial security, often getting richer.
“This should be a wake up call – we need an economic reset. It’s time for a new age of dignity and security at work.
“Without fundamental change, the government’s own levelling up agenda will be doomed to failure. And we risk repeating the same old mistakes of the past decade – allowing insecure work to spiral even further.
“Ministers must start by banning zero-hours contracts, raising the minimum wage with immediate effect and increasing statutory sick pay to a real Living Wage, making it available to all.
“And we know that the best way for workers to win better pay and conditions at work is through their union.”
On the risk to low-paid workers this autumn, Frances said: “The imminent end to the furlough scheme and cut to Universal Credit this autumn will be a hammer blow for low-paid workers and could plunge millions into hardship, many of whom are already teetering on the edge.
“The government must reverse its senseless decision to cut Universal Credit and extend the furlough scheme for as long as is needed to protect jobs and livelihoods.”
Prime Minister Boris Johnson’s statement at yesterday’s press conference on health and social care:
Good afternoon, I’m joined by the Chancellor of the Exchequer and the Secretary of State for Health and Social Care, because today we’re setting out our plan to help our NHS recover from the pandemic and build back better by fixing the problems in health and social care that governments have avoided for decades.
We all know someone whose test, scan or hip replacement was delayed or who helped to protect the NHS amid the immense pressures of Covid by putting off treatment for a new medical condition.
And now, as people come forward again, we need to pay for those missed operations and treatments; we need to pay good wages for the 50,000 extra nurses we are recruiting, we need to go beyond the record funding we’ve already provided to the NHS, and that means going further than the 48 hospitals and 50 million more GP appointments.
So today, following the most successful vaccine programme in the world, we’re beginning the biggest catch-up programme in the history of the NHS, increasing hospital capacity by 110 per cent, and enabling 9 million more appointments, scans and operations.
I have to level with people – waiting lists will get worse before they get better, but compared with before Covid, by 2024/25 our plan will allow the NHS to aim to treat 30 per cent more patients who need elective care – like knee replacements or cancer screening.
A recovery on this scale cannot be delivered by cheese-paring budgets elsewhere and it would be irresponsible to cover a permanent increase in health and social care spending with higher day to day borrowing.
For more than 70 years, we’ve lived by the principle that everyone pays for the NHS through our taxes, so it’s there for all of us when we need it.
In that spirit, from April we will have a new UK-wide 1.25 per cent Health and Social Care Levy on earned income, with the money required by law to go directly to health and social care across the whole of our United Kingdom, and with dividends rates increasing by the same amount.
This will raise almost £36 billion over the next three years, not just funding more care but better care, including better screening equipment to diagnose cancer earlier and digital technologies allowing doctors to monitor patients in their homes.
The levy will share the cost as fairly as possible between people and businesses: because we all benefit from a well-supported NHS and all businesses benefit from a healthy workforce.
And those who earn more will pay more, including those who continue to work over the State Pension Age.
The highest earning 14 per cent of the population will pay around half of the revenue raised; no-one earning less than £9,568 will pay a penny, and most small businesses will be protected, with 40 per cent paying nothing extra at all.
And this new investment will go alongside vital reform, because we learned from the pandemic that we can’t fix the NHS unless we also fix social care.
When Covid struck, there were 30,000 hospital beds in England occupied by people who would have been better cared for elsewhere, and the inevitable consequence was that patients could not get the hip operations or cancer treatment or whatever other help they needed.
And those people were often in hospital because they feared the costs of care in a residential home.
If you suffer from cancer or heart disease, the NHS will cover the costs of your treatment in full.
But if you develop Alzheimer’s or Parkinson’s, then you have to pay for everything above a very low threshold.
Today, 1 in 7 of us can expect to face care costs exceeding £100,000 in our later years, and millions more live in fear that they could be among that 1 in 7.
Suppose you have a house worth £250,000 and you’re in a care home for eight years, then once you’ve paid your bills, you could be left with just £14,000 after a lifetime of work, effort and saving – having sacrificed everything else – everything that you would otherwise have passed on to your children – simply to avoid the indignity of suffering.
So we are doing something that, frankly, should have been done a long time ago, and share the risk of these catastrophic care costs, so everyone is relieved of that fear of financial ruin.
We’re setting a limit to what people will ever have to pay, regardless of assets or income.
In England, from October 2023, no-one starting care will pay more than £86,000 over their lifetime.
Nobody with assets of less than £20,000 will have to pay anything at all, and anyone with assets between £20,000 and £100,000 will be eligible for means-tested support.
And we’ll also address the fear many have about how their parents or grandparents will be looked after.
We’ll invest in the quality of care, and in carers themselves, with £500 million going to hundreds of thousands of new training places, mental health support for carers and improved recruitment, making sure that caring is a properly respected profession in its own right.
And we’ll integrate health and social care in England so that all elderly and disabled people are looked after with the dignity they deserve.
No Conservative Government wants to raise taxes, but nor could we in good conscience meet the cost of this plan simply by borrowing the money and imposing the burden on future generations.
So I will be absolutely frank with you: this new levy will break our manifesto commitment, but a global pandemic wasn’t in our manifesto either, and everyone knows in their bones that after everything we’ve spent to protect people through that crisis, we cannot now shirk the challenge of putting the NHS back on its feet, which requires fixing the problem of social care, and investing the money needed.
So we will do what is right, reasonable and fair, we’ll make up the Covid backlogs, we’ll fund more nurses and, I hope, we will remove the anxiety of millions of families up and down the land by taking forward reforms that have been delayed for far too long.
Chancellor Rishi Sunak’s statement on health and social care, delivered on 7 September 2021
Good afternoon.
I want to address straight away the following question:
Why do we need to raise taxes?
Three reasons.
First, we need to properly fund the NHS as we recover from the pandemic.
Senior NHS leaders have made clear that without more funding we will not properly be able to address the significant backlog…
…in people’s cancelled operations, delayed treatments, or missed diagnoses.
To get everyone the care they need is going to take time – and it is going to take money.
The second reason is that social care plans announced today have created an expanded safety net.
Instead of individuals having to bear the financial risks of catastrophic care costs themselves, we as a country are deciding to share more of that risk collectively.
This is a permanent, new role for the Government.
And as such we need a permanent, new way to fund it.
The only alternative would be to borrow more indefinitely.
But that would be irresponsible at a time when our national debt is already the highest it has been in peacetime.
And it would be dishonest – borrowing more today just means higher taxes tomorrow.
The third reason we need to raise taxes is to fund the Government’s vision for the future of health and social care.
Properly funded, we can tackle not just the NHS backlog and expand the social care safety net, we can afford the nurses pay rise;
Invest in the newest, most modern equipment;
Prepare for the next pandemic;
And provide one of the largest investments ever to upskill social care workers.
In other words, we can build the modern, more efficient health and social care services the British public deserves.
To fund this vital spending, we will introduce a new UK-wide Health and Social Care Levy.
From next April, we will ask businesses, employees and the self-employed to pay an extra 1.25% on earnings.
All the money we raise will be legally ringfenced, which means every pound from the Levy will go directly to health and social care.
The Levy is the best way to raise the funds we need.
It is fair: the more you earn, the more you pay.
It is honest: it is not a stealth tax or borrowed – the Levy will be there in black and white on people’s payslips.
And it is UK-wide, so people in England, Scotland, Wales and Northern Ireland will all pay the same amount.
To make sure everyone pays their fair share, we will also increase dividend tax rates by the same amount.
And, from 2023, people over the age of 66 will be asked to pay the Levy on their earnings too.
No Government wants to have to raise taxes.
But these are extraordinary times and we face extraordinary circumstances.
For more than 70 years, it has been an article of faith in this country that our national health service should be free at the point of use, funded by general taxation.
If we are serious about defending this principle in a post-Covid world …
… we have to be honest with ourselves about the costs that brings …
… and be prepared to take the difficult and responsible decisions to meet them.
Thank you.
PM Boris Johnson’s letter to the First Ministers of Scotland, Wales and Northern Ireland and Deputy First Minister of Northern Ireland on the new health and social care reform:
National Insurance Contributions increase ‘adds insult to injury’ for families facing devastating cut to Universal Credit
New Joseph Rowntree Foundation analysis estimates that around 2 million families on low incomes who receive Universal Credit or Working Tax Credit will pay on average around an extra £100 per year in National Insurance contributions under the Government’s proposed changes.
Peter Matejic, Deputy Director of Evidence & Impact at JRF said:“We are concerned that around two million families on low incomes who receive Universal Credit or Working Tax Credit will pay on average around an extra £100 per year in national insurance contributions under the Government’s proposal.
“This extra cost adds insult to injury for these families who are facing a historic £1,040 cut to their annual incomes when Universal Credit and Working Tax Credit are reduced in less than a month on 6 October. If it presses ahead, this Government will be responsible for the single biggest overnight cut to social security ever.
“With inflation rising, the cost of living going up and an energy price rise coming in October, many struggling families are wondering how on earth they will be expected to make ends meet from next month.
“The Chancellor is in denial if he seriously believes this cut will not impose unnecessary hardship on millions of families – the majority of whom are in low-paid work.
“Any MP who is concerned about families on low incomes must urge the Prime Minister and Chancellor to reverse this damaging cut, which will have an immediate and devastating impact on their constituents’ living standards in just a few weeks’ time.”
RCEM welcomes Government funding, but warns it won’t be enough
Responding to the announcement of an extra £5.4 billion of funding for the NHS, Dr Katherine Henderson, President of the Royal College of Emergency Medicine, said: “The announcement of this additional funding for the NHS over the next six months is very welcome.
“It comes at a crucial time when the health service enters what will likely be its most challenging winter ever, as it exits the pandemic, seeks to recover the elective backlog and faces the worst ever levels of performance in the summer.
“It is particularly welcome to see the investment in improving infection prevention control measures in hospitals, as this will continue to be of the utmost importance in the coming months. It is also pleasing to see funding to continue to improve the timely discharge of hospital patients. It is vital for Emergency Care that there is good flow throughout the hospital, which includes making sure patients have a smooth discharge from the hospital.
“While this short-term funding is appreciated, there must also be an adequate response to the sharp increase in demand and equivalent deterioration in performance. It is unlikely that this funding will be enough to help enable longer term recovery.
“The challenges that our Emergency Departments face stem from workforce shortages and capacity issues. A shortage of beds can lead to crowding, corridor care and poor flow through the hospital. Workforce shortages spread existing staff thinly and put them under severe pressure.
“These are long term issues and the only way to tackle them will be via a long-term funding plan for the health service, including a workforce plan to recruit nurses and doctors by expanding student medical and nursing places and training places.”
Dr Katherine Henderson, commenting on the announcement of a three-year settlement for health and social care, continued: “The three-year funding settlement announced for health and social care is welcome.
“But the scale of the challenges faced across the health and social care service at a crucial time of recovery mean this will likely not be enough – and the government must be realistic in the colossal task ahead for the health and social care service. It is essential that a plan to address the workforce crisis is prioritised.
“It is also welcome to see the long overdue the first steps towards a plan for social care. There has been a crisis within social care for some time, so it will be good to see the government fulfil its pledge to reform and tackle the social care crisis.
“For that to happen, it is vital that an adequate proportion of the settlement is allocated to social care.”
Commenting on Tuesday’s social care announcement by the Prime Minister, TUC General Secretary Frances O’Grady said: “We need a social care system that delivers high-quality care and high-quality employment.
“New funding for social care is long overdue. But today’s announcement will have been deeply disappointing both to those who use care, and to those who provide it.
“The Prime Minister promised us a real plan for social care services, but what we got was vague promises of money tomorrow.
“Care workers need to see more pay in their pockets now. Nothing today delivered that. Instead, the only difference it will make to low-paid care staff is to push up their taxes.
“This is so disappointing after the dedication care workers have shown during this pandemic keeping services running and looking after our loved ones.
“Proposals to tax dividends should have been just once piece in a plan to tax wealth, not an afterthought to a plan to tax the low-paid workers who’ve got us through the pandemic.
“We know social care needs extra funding. But the prime minister is raiding the pockets of low-paid workers, while leaving the wealthy barely touched.
“We need a genuine plan that will urgently tackle the endemic low pay and job insecurity that blights the social care sector – and is causing huge staff shortages and undermining the quality of care people receive.”
The TUC published proposals on Sunday to fund social care and a pay rise for the workforce by increasing Capital Gains Tax.
The union body says increasing tax on dividends is a welcome first step to reforming the way we tax wealth, but that it won’t generate the revenue needed to deliver a social care system this country deserves.
Instead, by taxing wealth and assets at the same level as income tax, the government could raise up to £17bn a year to invest in services and give all care staff a minimum wage of £10 an hour.
TUC analysis shows that seven in 10 social care workers earn less than £10 an hour and one in four are on zero-hours contracts.
Polling published on Sunday by the TUC showed that eight in 10 working adults – including seven in 10 Conservative voters – support a £10 minimum wage for care workers.
As we recover from the pandemic, how do we build a world of work that gives everyone the dignity and fairness we deserve?
Every trade unionist is invited to join us online for three days of discovery and debate at Congress 2021.
What to expect
Between Sunday 12 September and Tuesday 14 September, union members across the UK are meeting online to discuss how we build stronger unions and mobilise for a new deal for workers.
We’ll have debates on investing in a green economy, with good unionised jobs. We’ll discuss tackling racism, highlighting the work of the TUC’s Anti-Racism Task Force. And we’ll campaign for an overdue pay rise for our key workers and an end to the scandal of fire and rehire.
We’ll hear from Keir Starmer, leader of the opposition, and TUC general secretary Frances O’Grady, as well as union leaders, activists and key workers. A full online fringe events programme offers everyone a deeper chance to engage on issues they care about.
Join us
Congress is open to everyone. We have a growing union movement, based on our work keeping members safe and protecting their rights and livelihoods throughout the crisis.
This is our moment to demand real change for working people.
TUC calls for permanent short-time working scheme to protect jobs in times of economic crisis and change
TUC says government must build on the success of furlough – and set up a permanent scheme to deal with big disruptions to jobs in the future, like the transition to net zero, future pandemics and technological change
Periods of industrial change have too often been mismanaged and led to increased inequality – a short-time working scheme would help prevent this, says TUC
Union body warns of job losses amid abrupt end to furlough scheme
The TUC is calling on the government to establish a permanent short-time working scheme as “a post pandemic legacy” to help protect working people through periods of future economic change.
The TUC says the furlough scheme, while far from perfect, is one of the major successes of government policy during the pandemic, protecting millions of jobs and livelihoods.
On the back of the success of the furlough scheme, the union body is urging government to build on furlough – “not throw away its good work” – with a permanent short-time working scheme to make the labour market more resilient in times of change and crisis.
The union body adds that because of the UK transition to net zero and the increased uptake of new technology, this is “hugely relevant”.
Case for a short-time working scheme
In a new report, Beyond furlough: why the UK needs a permanent short-time work scheme, the TUC says the case for a short-time working scheme is clear, citing significant benefits for workers, firms and government. The union body says for workers, a short-time working scheme would:
reduce the risk of workers losing their jobs in times of crisis
protect workers’ incomes – particularly as short-time working schemes are usually more generous than unemployment benefits.
prevent widening inequalities – protecting women, disabled workers and BME workers who tend to lose their jobs first in a recession due to structural discrimination
And for the government, it would:
protect against long-term unemployment, and the subsequent devastating impacts on communities
help stabilise the economy, and encourage a faster economic recovery as workers continue to spend their wages
save money, as the cost of furlough schemes is often below the cost of unemployment benefits, particularly where costs are shared with employers.
For employers, the TUC says that such a scheme would produce significant savings on redundancy, training and hiring costs, as they enable firms to keep skilled workers on their books.
The union body points out that the UK is an anomaly among developed nations in having no permanent short-time working scheme to deal with periods of industrial disruption and weak demand.
In the OECD, 23 countries had short-time working schemes in place before the coronavirus pandemic, including in Germany, Japan and many US states.
Turbulent times ahead
The TUC predicts that the UK economy is likely to face significant risks in the future – be it from climate change and the transition to net zero, new technologies such as AI, new variants or another pandemic. All could cause unpredictable and widespread disruption in the labour market – causing big spikes in unemployment and business failure.
The TUC cites failed attempts to manage industrial change in the past, which “left communities abandoned” and played a major role in the widespread regional inequality we see today.
The union body says that if the government is serious about levelling up, it will put in place a permanent short-time working scheme to prevent inequalities spiralling – adding that a short-time working scheme could play a vital role in achieving a ‘just transition’ to net zero.
Criteria for accessing scheme
The TUC says the scheme should be governed by a tripartite panel bringing together unions, business and government, which should be tasked with designing the criteria for the new scheme.
In designing the scheme, the TUC says the panel should take into account best practice from existing global schemes. The union body has set out the following conditions which it says must be in place for accessing a short-time working scheme:
Workers should continue to receive at least 80 per cent of their wages for any time on the scheme, with a guarantee that no-one will fall below the minimum wage for their normal working hours
Any worker working less than 90 per cent of their normal working hours must be offered funded training.
Firms must set out a plan for fair pay and decent jobs
Firms should put in place an agreement with their workers, either through a recognised union or through consultation mechanisms.
Firms must demonstrate a reduction in demand – which can include restructuring
Firms should commit to paying their corporation tax in the UK, and not pay out dividends while using the scheme.
The scheme should ensure full flexibility in working hours.
There should be time limits on the use of the scheme, with extension possible in limited circumstances.
TUC General Secretary Frances O’Grady said: “Everyone deserves dignity and security at work. The pandemic shows how an unexpected economic shock can wreak havoc on jobs and livelihoods with little warning.
“In a changing and unpredictable world – as we battle climate change and new technologies emerge – a permanent short-time working scheme would help make our labour market more resilient and protect jobs and livelihoods.
“Too often in the past, periods of economic and industrial change have been badly mismanaged – increasing inequalities and leaving working people and whole communities abandoned.
“Setting up a ‘daughter of furlough’ to provide certainty to workers and firms through future industrial change would be a fitting pandemic legacy.
“Furlough has been a lifeline for millions of working people during the pandemic. Now is the time for the government to build on the success of furlough with a short-time working scheme – not throw away its good work.”
Furlough warning
The call for a permanent short-time working scheme comes exactly six weeks before the furlough scheme is set to end – the date at which employers are legally obliged to start consulting on planned redundancies with their staff.
The TUC is warning the abrupt end to the furlough scheme will cause unnecessary job losses and may harm the country’s economic recovery.
Recently, aviation unions have also been raising concerns about the sudden end to the furlough scheme and the loss of jobs in the sector.
On the ending of the furlough scheme, Frances said: “The jobs market is still fragile, with more than a million people still on furlough.
“An abrupt and premature end to the furlough scheme will needlessly cost jobs and harm our economic recovery.
“Instead of pulling the rug out from under the feet of businesses and workers, the chancellor must extend the furlough scheme for as long as is needed to protect jobs and livelihoods.”
Captain Martin Chalk, Acting General Secretary of BALPA said: “The UK aviation sector is the only industry to remain effectively in a lockdown.
“It employs about one million workers directly and ONS statistics show that 57% of remaining employees in air transport companies remain on furlough.
“The scale of jobs at risk of redundancy when the furlough scheme ends is self-evident, yet the footprint of aviation must not be missed – one in four constituencies has over 1,000 people employed directly by aviation companies.
“If the Chancellor chooses not to extend furlough, the effects will be felt by workers, communities and businesses right across the country.”
Diana Holland, Unite Assistant General Secretary, said: “Aviation is crucial to the UK’s economic recovery. It needs furlough support to continue while Covid restrictions apply.
“Airports and aviation support thousands of jobs. Without support all are at high risk.”
– The full report Beyond furlough: why the UK needs a permanent short-time work scheme is here:
Union body warns use of umbrella companies could spiral post-pandemic
New TUC research estimates that half of agency workers work for umbrella companies
The TUC has called for umbrella companies to be banned, as it publishes a new report on their increasingly widespread use in the UK labour market. The union body says the scandalous workplace practices associated with umbrella companies have “no place in modern Britain”.
An umbrella company is essentially a payroll company, used by recruitment agencies to operate a PAYE (pay-as-you-earn) system for the agency workers that they find work for. In many cases, the umbrella company will also employ the agency worker, with the agency workers becoming “employees” of the umbrella company.
A fragmented employment relationship
The TUC says that umbrella companies create multiple issues which mean it is difficult for workers to exercise their basic rights.
The union body says in particular, workers face misleading and unfair deductions from pay, adding that breaches of holiday leave and pay entitlement are widespread – with umbrella companies preventing workers from taking their holiday entitlements.
To make matters worse, the TUC says “the use of umbrella companies fragments the employment relationship”, leaving workers unsure of who to speak to resolve problems and often “passed from pillar to post” when trying to sort out their issues.
It has been widely reported that some umbrella companies promote and coerce their employees to use tax evasion schemes, leaving workers potentially facing huge future tax bills.
Increased use of umbrella companies
The union body is warning that the use of umbrella companies could spiral post-pandemic because of a combination of changes to tax rules (IR35) which have come in this financial year and the increase in agency work.
The IR35 or “off-payroll working rules” will potentially make employers liable for the tax and national insurance contributions of the contractors that they engage with. Government guidance states that the off-payroll working rules are unlikely to apply if you are employed by an umbrella company.
The TUC predicts that transferring contractors to umbrella companies will be seen by some companies as a convenient way to continue to shirk their tax and employment rights obligation.
New TUC research estimates that half of agency workers work for umbrella companies. Recruitment agencies have been used through the pandemic for key worker roles that needed to be mobilised quickly, like vaccinators and testing staff.
The TUC is concerned that post-pandemic the number of agency workers will increase – and therefore umbrella workers too – as companies scramble for new staff amid reopening and labour shortages in some sectors.
The TUC warns that there is no proper regulation of the sector, because the government has failed to task any of the enforcement bodies with regulating the umbrella sector, despite a recommendation from the Taylor Review into Modern Working Practices, that enforcement of umbrella companies should be stepped up.
The union body says this is a “gaping hole in enforcement” and lets down some of the lowest paid and most insecure workers.
In order to clamp down on the umbrella companies, the TUC is calling for:
An outright ban on umbrella companies by requiring employment agencies to pay and employ the staff they place with clients
Joint liability laws in supply chains, that make the end client and any contractor in the supply chain responsible for upholding the legal rights of those working in the supply chain
Greater trade union access to workplaces and new trade union rights
TUC General Secretary Frances O’Grady said: “Everyone deserves decent work. But too many low-paid workers are denied the wages they were promised and basic legal rights like holiday pay because they work for umbrella companies.
“Lots of them are the key workers we all applauded – like social care workers, teachers and coronavirus testing staff.
“These scandalous workplace practices have no place in modern Britain. But our inadequate regulations let dodgy umbrella companies off the hook – allowing them to act with impunity.
“Employers shouldn’t be able to wash their hands of any responsibility by farming out their duties to a long line of intermediaries.
“Enough is enough. It’s time for ministers to ban umbrella companies, without delay.”
The UK Government has now confirmed that £20 a week will be cut from Universal Credit in October. By removing this lifeline, poverty will increase among the 6 million claimants of Universal Credit, says the TUC.
40 percent of these claimants – over two million people – are in work.
Number of people on Universal Credit 2020/21 (including in work and out of work breakdown):
Source – TUC analysis of stat explore data using May 2021 data
Our new analysis reveals the regional and local impact cutting Universal Credit will have on low-paid workers.
Numbers on Universal Credit in work by region/nation (May 2021):
Region/nation
Number in work receiving UC
Total number receiving UC
% Of UC recipients in work
North East
100,437
281,759
35.6%
North West
282,131
755,400
37.3%
Yorkshire & Humber
194,344
518,269
37.5%
East Midlands
166,265
403,272
41.2%
West Midlands
214,730
585,069
36.7%
East of England
199,459
494,271
40.4%
London
375,426
1,015,321
37.0%
South East
274,235
677,609
40.5%
South West
184,983
439,612
42.1%
Wales
103,609
279,068
37.1%
Scotland
176,935
481,263
36.8%
Total
2,274,976
5,938,914
38.3%
Source – TUC analysis of stat explore data using May 2021 data – for constituency level data see press release
The impact on poverty
The government justifies the £20 cut by saying its focus is to move people into jobs, but this misses the point. Many of those on Universal Credit (40 percent of claimants) are already in work.
2.3 million workers, many of which are key worker households, will be worse off as a result of the government’s plans to cut universal credit.
The working tax credit is also being cut, having also been raised by £20 per week in early 2020. This cut to crucial in-work support will push more families below the breadline.
Analysis by the Joseph Rowntree Foundation shows the majority of families that lose out will be working families.
These cuts are likely to worsen already record-high levels of poverty.
Just before the pandemic hit, poverty was at a record high, with 14.5 million people in poverty. The majority of these (57 per cent, or 8.3 million people) were in working households. The idea that work is a guaranteed route out of poverty is now simply not true.
Low standard rate
Even with the increase in the rate by £20 a week – the basic rate of universal credit is worth around a sixth of average weekly pay.
The UK system is strikingly less generous than in most other European countries, where unemployment benefits are related (at least in the initial period of unemployment) to previous wages to cushion income shocks, ranging from 60 per cent of previous wages in Germany to 90 per cent in Denmark.
The TUC believes that rather than being cut, Universal Credit should be increased to at least 80 per cent of the level of the living wage, around £260.
And the temporary £20 top-up excluded those on legacy benefits all together, many of whom are disabled or carers, and cannot work. This should be extended to these claimants too.
Change is needed
The UK safety net is failing as a result of years of deliberate attacks on the social security system, with around £34 billion of cuts made to social security since 2010.
The reason for increasing Universal Credit and Working tax credits was that previous rates were too low. Removing this increase makes no sense. The pandemic might – hopefully – be going away, but the need for social security isn’t.
The £20 increase in universal credit has been a “vital lifeline” for low-paid workers: having £20 a week less to spend will mean going without the essentials in life.
An ambitious agenda to tackle in-work poverty would include decent pay, secure work, progression opportunities for those on low incomes, and affordable childcare and housing costs.
It would not include a cut to the lifeline support that working families across the country are relying on.
TUC publishes first UK major report into sexual harassment of disabled women at work
Most disabled women surveyed told the TUC they have been sexually harassed at work – and 1 in 8 of those say they left their jobs because of this
TUC calls for a new duty on employers to protect all their staff from sexual harassment at work
Around 7 in 10 (68%) disabled women surveyed about sexual harassment say they have been sexually harassed at work, according to a new poll published by the TUC.
And younger disabled women aged 18 to 34 are even more likely to have experienced sexual harassment, with almost 8 out of 10 (78%) reporting being harassed at work.
Sexual harassment
A ground-breaking TUC study on sexual harassment published in 2016 found that more than half (52%) of women had experienced sexual harassment in the workplace. And in a further TUC survey in 2019, nearly 7 in 10 (68%) lesbian, gay, bisexual and trans people reported being sexually harassed at work
Sexual harassment at work can take many forms, from suggestive remarks, jokes about a colleague’s sex life, circulating pornography, to inappropriate touching, hugging or kissing, demands for sexual favours, and even assault and rape.
This new TUC survey – which is the first major study into the sexual harassment of disabled women at work in Great Britain, and was carried out by YouGov – found that of those surveyed:
Around 2 in 5 (38%) have experienced unwelcome sexual advances at work.
More than 1 in 3 (36%) say they have experienced unwanted touching.
Almost 1 in 5 (18%) experienced sexual assault, such as unwanted sexual touching.
And 1 in 25 (4%) have experienced a serious sexual assault or rape at work.
Reporting
Two-thirds (67%) of disabled women who experienced sexual harassment at work told the TUC that they did not report the harassment to their boss the most recent time it happened. Of these, the most common reason was that they did not believe they would be taken seriously (39%).
Some said they were worried it would have a negative impact on their career or work relationships (30%). Other reasons included not thinking they would be believed (13%) or thinking they would be blamed if they reported the incident (11%).
And unfortunately, of those who did report the most recent instance of sexual harassment, more than half (53%) said it was not dealt with satisfactorily.
Impact
Disabled women told the TUC that sexual harassment had a big effect on their lives.
Around 1 in 3 (34%) said their experiences had a negative impact on their mental health. More than 1 in 5 (21%) said it negatively affected their relationships with colleagues. And it caused 1 in 8 (12%) to leave their job or employer entirely.
Disabled women face significant barriers getting into work and to getting paid the same as non-disabled workers, says the TUC.
TUC research in October 2020 found that disabled women earned 36% less than non-disabled men. And the analysis found that the unemployment gap for disabled women, when compared to non-disabled men was 32.6 percentage points.
TUC General Secretary Frances O’Grady said: “No one should face sexual harassment at work. But seven in ten disabled women say they have been sexually harassed by a colleague or a customer while at work.
“Four years on from the explosion of #MeToo on a global scale, employers still aren’t doing enough to make sure women are safe at work. It’s time for every employer to take responsibility for protecting their staff from sexual harassment.
“Ministers must change the law to make employers protect workers from sexual harassment specifically, and from all forms of harassment by customers and clients.
“Anyone worried about sexual harassment at work should get in touch with their union.”
Ministers must act
The TUC is calling on the government to take a range of actions including:
Introduce a new duty to prevent sexual harassment, putting an enforceable legal requirement on all employers to protect their workers from harassment.
Strengthen legislation to tackle third-party harassment in the upcoming employment bill.
Increase funding for the Equality and Human Rights Commission so it can enforce the new duty to prevent sexual harassment.
Introduce a statutory code of practice on sexual harassment and harassment at work, setting out the steps that employers should take to prevent and respond to sexual harassment, and what can be considered in evidence when determining whether the duty has been breached.
