Former Lib Dem leader says the change is designed to trick workers
Writing for the Evening Standard yesterday, former deputy prime minister Nick Clegg described his ‘dismay’ at George Osborne’s July Budget, in which he introduced plans for a new living wage.
According to Clegg, the chancellor’s plans to cut tax credits and slash universal credit to the bare minimum amount to ‘an extensive dismantling of the working incentives for millions of low-paid workers’.
Clegg isn’t the first to say that the living wage will be undercut by benefit changes. This week the Institute for Fiscal Studies (IFS) calculated that only around 13 per cent of the losses due to tax and benefit changes for all working age households will be offset by the increased NLW.
As Clegg points out, Osborne is essentially making up the cost of the living wage to the treasury by cutting benefits. The amount someone can earn before they start to lose their tax credits has been reduced to £3,850, and universal credit can start to be reduced when someone is earning as little as £2,304.
Clegg is also critical of the way the changes undermine the work incentive:
“People will think twice about taking on more work when the amount of money they can keep before their benefits disappear has been so dramatically reduced.”
Of course, Nick Clegg spent five years in the government which sowed the seeds of these changes, and he does have the grace to say that he’s ‘no slouch when it comes to welfare reforms’. As deputy prime minister he voted for a welfare cap, including child benefits, and a cap on tax credits, although he insisted yesterday that reforms were focused on those who earned ‘much more’ (that’s up for debate).
Since the election he has voted against reducing the household benefit cap and against freezing the rate of many working-age benefits. His latest contribution on the subject looks like an insistence that freed from the demands of the coalition, he is returning to a more compassionate view of welfare.
But with Osborne now free to pursue a pure Tory agenda, Clegg’s intervention is too late.
Ruby Stockham is a staff writer at Left Foot Forward
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