How new rules in Kwasi Kwarteng mini-Budget will squeeze benefits claimants further

The Government should have uprated benefit claims in the mini-Budget instead of making changes that will in fact make it more difficult for claimants to receive support, experts have said.

Households relying on universal credit may find it more difficult to claim their funds if they do not take “active steps” to find work, Chancellor Kwasi Kwarteng, said on Friday.

Under the changes, those who earn less than the equivalent of 15 hours a week at the National Living Wage will be required to meet regularly with their work coach. If they do not, the Government has threatened that their benefits could be reduced.

This will affect 120,000 more people on universal credit with the Government hoping the new rules will encourage more people to enter the labor market and boost the economy.

Mr Kwarteng said: “These gradual changes focus on getting people back into work and maximizing the hours people take on to help grow the economy and raise living standards for all. It’s a win-win. It boosts incomes for families and helps businesses get the domestic workers they need, all while supporting economic growth.”

However, industry experts have said this will add more misery to lower income families this winter when the cost of living is set to worsen and said the Government could have increased benefits in line with inflation.

They warn it will also pile even on more admin onto claimants.

Rebecca McDonald, chief economist at the Joseph Rowntree Foundation, said: “This is a budget that has willfully ignored families struggling through a cost of living emergency and instead targeted its action at the richest.

“It leaves those on the lowest incomes out in the cold with no extra help to get them through the winter. The Government says it is on the side of the British people, but it has clearly chosen to turn its back on millions who are on the lowest incomes.

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“It should have combined its decision to put money into the pockets of high earners with a decision to uprate benefits early.

“The Government may have an economic theory, but today it has proven it has no understanding of the economic reality facing millions across the UK.”

Jo How, employment tax specialist at Blick Rothenberg, said the benefits of the changes were very slim. She added: “In terms of tax, it doesn’t make a lot of difference as those on universal credit pay very little, if any tax.

“The additional pressure is unfair as it is hard enough for people on benefits to live off what they already have without trudging to the benefits center to speak to someone unsympathetic.”

She said it might encourage people to take jobs they won’t be good at or enjoy, as their benefits will be stopped anyway. In this situation, it might also deter people from applying to other jobs again.

Ms How pointed out that the admin needed for universal credit was already substantial, with claimants having to regularly update their online workbooks showing which jobs they have applied to and the efforts they have put in to apply.

Those who do not complete their workbooks could potentially see their benefits paused.

Admin has already been seen as an issue, especially when universal credit replaced a number of other benefits, including Jobseekers Allowance, with them being rolled into one package in 2013.

At the time, many claimants said they found the administrative process difficult to navigate, with those lacking digital literacy particularly finding the online portal hard to use.

Adding more administrative duties to claimants could create even further difficulties, critics of the latest changes say.

Other experts have said that the number of hours being worked is not the important issue. Tony Wilson, director at the Institute for Employment Studies, told i: “These measures aren’t going to make any difference at all to the labor shortages that employers are facing.

“If anything they could make them even worse, by forcing people to change jobs or give up work entirely.

“The problem is that we don’t have enough workers, not that our workers aren’t doing enough hours. These labor shortages are holding back growth and fueling inflation, which means living standards will be lower and interest rates higher for longer.

“What we urgently need is a proper plan to help the nearly two million people who are out of work, not looking for work, but want a job.”

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