Spending £1 billion increasing work allowances helps more people exit poverty, and provides a larger budget boost to households in lower-income deciles, compared to spending the same amount on lowering the taper.
This is according to the September 2018 Joseph Rowntree Foundation analysis of different ways of boosting the budgets of low-income working households claiming Universal Credit (UC).
The report finds that:
- Investing in reducing the taper (the speed with which UC is withdrawn once earnings exceed the work allowance) to 60.75% would cost just under £1 billion. It would change the mean weekly incomes of the poorest income decile by £1.10.
- Investing in increasing the work allowance (the amount that can be earned before UC starts to be withdrawn) by 20.5% for families with children would cost the same amount, and would change mean weekly incomes of the same group by £2.00.
- Increasing the work allowance provided a higher change in mean weekly incomes for each of the poorest three deciles, compared with lowering the taper.
