Oral Answers to Questions

John Penrose Excerpts

Tuesday 15th March 2022 Commons Chamber

[Rishi Sunak]

We are spending record amounts on supporting those who are disabled. Relative to the OECD, I think we are spending in excess of the average for other leading countries. My right hon. Friend the Secretary of State for Work and Pensions has a particular programme of support in place to help those who are disabled to move into employment; plans were announced earlier this year.

[John Penrose (Weston-super-Mare) (Con)]

T6. In his last Budget, the Chancellor slashed universal credit withdrawal rates, delivering an 8% tax cut for the least well off, but as I explained in “Poverty Trapped”, the combined deductions from income tax and benefits withdrawals often still top 70% for the lowest-paid. If tax rates above 45% destroy work incentives for high earners, why should it be any different for low earners? How much more opportunity, energy and ambition could we unleash if these regressively high and unfair rates were cut even further?

[Lucy Frazer]

My hon. Friend is right to highlight the effect of a high effective tax rate on incentives to work. That is why the Government reduced the universal credit taper rate from 63% to 55% and increased the universal credit work allowance by £500 per year, which is essentially a tax cut for the lowest-paid, worth more than £2 billion in 2022-23, and means that 1.9 million households will keep an extra £1,000 per year on average.