DWP Budget Changes

DWP Budget Changes

Universal Credit taper rate changed

If you’re getting Universal Credit and you’re working, you will be allowed to keep an extra 8p for every pound you earn after tax, NI and pension contributions are taken off as the rate at which your Universal Credit reduces falls from 63p to 55p. This is known as the taper rate.

You’ll be able to earn an extra £500 a year before the taper rate is applied if you’re eligible to get a work allowance.

These changes are expected to be in place by no later than 1 December 2021 so you should expect to see a change in income in your next Universal Credit payment after this date.

National Living Wage increased

From 1 April 2022, the National Living Wage for adults aged 23 and over will increase from £8.91 per hour to £9.50 per hour.

The National Minimum Wage for workers under the age of 23 will also increase from 1 April 2022 by the following amounts:

• for 21- and 22-year-olds, from £8.36 to £9.18 per hour
• for 18- to 20-year-olds, from £6.56 to £6.83 per hour
• for 16- and 17-year-olds, from £4.62 to £4.81 per hour
• for apprentices, from £4.30 to £4.81 per hour.

Universal Credit Work Allowance

Some households can earn a set amount before the taper rate kicks in. This is called the Work Allowance, and is generally for households on Universal Credit who are in work and either looking after a child or have a household member with limited capability for work. 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.

Both of these changes will be implemented from December 2021, and together they will benefit 1.9 million households who will, on average keep around an extra £1,000 a year. The changes apply across Great Britain, and the Northern Ireland Executive will be funded to match them. If you provide benefits advice or offer benefit calculators on your website, we encourage you to update your advice by 1 December to reflect these changes.

Supporting disabled people into work

To support disabled people into work, the government confirmed as part of the spending review that it is providing specialised disability employment support worth over £1.1bn over the next three years, including an additional £156m over the SR period for health and disability support with a focus on additional work coaches.

This is alongside the Work and Health Programme which will continue to provide personal support to disabled people to find jobs that match their employment and health needs, and the Access to Work scheme which will continue to help cover the costs of workplace adaptations, special equipment and travel.

Other key measures to help people into work and tackle the cost of living

• The government is providing targeted additional support for groups which may need extra help to get into work and progress. This includes workers who have left the furlough scheme and are making a Universal Credit claim who will be prioritised through the Job Finding Support scheme.
• Older workers – those over 50 - will benefit from additional support. They will receive better information and guidance on later life planning, helping them to plan their career and remain in work. For those who have lost their jobs, this funding will ensure that older job seekers on Universal Credit receive more intensive, tailored support.
• Over the winter the £500m Household Support Fund will help vulnerable households with the cost of essentials such as food, clothing and utilities – Local Authorities in England will be allocated up to £421m of this funding and will ensure it reaches those who need it most; with 50% ringfenced for households with children. The additional funding will be allocated to the devolved administrations in the usual way.
• Increasing the National Living Wage from £8.90 per hour to £9.50 per hour for over 23s
• 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.
• Raising the personal tax allowance to £12,570 from April, meaning workers keep more of the money they earn

• Maintaining the energy price cap, which since 2019 has saved 15 million households £100 a year on average

Plan for Jobs

Earlier this month (4th October), the Government announced a further £500million to expand the Plan for Jobs package and build on the successes to date, this included:

• Extending the Youth Offer to 2025 and expanding the eligibility to include 16 and 17 year olds in addition to 18-24 year olds. This provides additional support to unemployed young people on Universal Credit who are searching for work through its Youth Employment Programme, supportive Youth Hubs and specialised employability coaches.
• Kickstart Scheme being extended to March 2022 – which will mean young people have until the spring to take up one of the scheme’s vacancies.
• Job Entry Targeted Support (JETS) - a provision aimed at claimants who have recently become unemployed - is being extended to September 2022 - which provides light touch support for 6 months for people who have been unemployed for 3 months or more.
• There is support to help people progress in work. Those in receipt of Universal Credit while working will be able to access work coach support, focusing on career progression advice. Job Centre Plus specialists will work with local employers to identify local opportunities for people to progress in work.