BUDGET DEBATE
It’s bonkers for me to go back to work – I’ll lose 74p for every pound I earn after Budget, says mum on Universal Credit
Single mums and dads face taking a huge hit as other benefits can also be cut
SINGLE mum Phoebe Evans says it would be “bonkers” for her to return to work — as she faces losing 74p in every pound she earns after last week’s Budget.
The mother of two says she is caught in a “hidden tax trap” after a Sun on Sunday probe found she would be subject to a marginal tax rate three times higher than most workers pay.
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Former community carer Phoebe, 27, from Cannock, Staffs, said: “There is a hidden single parent tax hitting mums like me that have to plan around their children’s schedule.
“I want to go back to work. I need to restart my career to provide for the girls. But there is no point in me returning to work when I’d only take home a quarter of what I earn.”
Phoebe — mum to daughters Shayne, two, and 10-month-old Cove — is one of thousands of single parents struggling to go back to work under the current benefits system.
Parents lose 55p from their Universal Credit allowance for every pound they earn over their work allowance, which in Phoebe’s case is £379 per month.
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Her wages would also be subject to income tax and National Insurance contributions.
So even after Chancellor Jeremy Hunt announced a National Insurance cut from ten per cent to eight per cent from April, single mums and dads face a huge hit as other benefits can also be cut.
Phoebe gets £1,458 a month on Universal Credit, which includes housing benefit of £550, child allowance of £539 and jobseeker’s allowance of £369.
Social policy software and analytics company Policy in Practice’s Better Off calculator predicts that on a £20,000 annual salary, Phoebe would pay a marginal tax rate of 67.6 per cent for every pound once benefit cuts are factored in.
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However, the rate would increase to 74p per pound — or 74.1 per cent — after her council tax support tapered off.
A spokesman for Policy in Practice said Mr Hunt could “potentially” do more to bring her tax rate down, but added that single mums are better off than they were five years ago.
From £450 tax cut to child benefit changes, what the Budget means for YOUR finances
He added: “The benefits system should support people when they need it and Universal Credit is designed to make sure that work pays. Lots of people want to work and being on benefits shouldn’t stop people.
“It’s always worth checking how it will affect you, and there are tools like our Better Off Calculator out there to help you do that.”
While Phoebe would lose a sizable chunk of her income in tax by returning to work, the Better Off Calculator finds she will still take home more money in full-time employment.
But with the added cost of commuting and the loss of other perks such as free prescriptions and council tax support, Phoebe insists going back to work is unrealistic.
She said: “On minimum wage, I’d have to work two or three hours to get enough after tax just to feed my kids. A tub of formula can cost £15 alone.
“As a single mum, I have proportionally higher costs than a person without children or a couple. I bear the brunt of all the costs.
“To face the prospect of losing discounts on council tax and free prescriptions means I’d have to earn more just to pay my bills.
“It needs to be easier, and providing more free childcare hours is only part of the solution. We need more support and help.
I want to go back to work. I need to restart my career to provide for the girls. But there is no point in me returning to work when I’d only take home a quarter of what I earn
Phoebe Evans
“I am not moaning or demanding more. I am simply the face of a real single mum on Universal Credit who realises she can’t go back to work because I’ll end up worse off.”
According to a report by single parent charity Gingerbread, lone parent households are among the most exposed to the cost of living crisis.
The charity’s boss, Victoria Benson, said: “Most single parents are in work with many wanting to do more hours. But for every hour a single parent works they need childcare which, as any parent knows, is eye-wateringly expensive, especially when you’re working full-time.
“Our research shows single parents who work full-time are more likely to be in problem debt, with increased childcare costs being the main reason.”
The Government told The Sun on Sunday: “Our reforms mean households are now at least £6,000 a year better off in full-time work than out of work on benefits, which is why we’re investing billions into our Back to Work Plan.
“Universal Credit is designed to ensure people are better off in work and by cutting National Insurance by a third, raising the National Living Wage again and making the largest ever investment in childcare in England, we are ensuring work always pays.”
'We’re getting more people off welfare', says Mel Stride, Secretary of State for Work and Pensions
WORK is about so much more than meets the eye.
It gives us purpose and routine. It works wonders for our health.
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It unlocks lifelong friends, days of fun and challenge and reward.
But let’s not beat about the bush, it also gives us the means to provide for ourselves and our families.
And that’s why, since 2010, the Conservatives have been determined to make work pay for hardworking people.
Take last week’s Budget.
The Chancellor has now slashed the rate of National Insurance by a third, so that 29million workers keep more of the cash they’ve worked so hard to earn.
The result? On the average salary, a nurse will see their income rise by over £1,000.
A self-employed plumber by £840. A family of two earners, almost £2,000.
And these are tax cuts with purpose.
By rewarding hard graft, they will also result in more than 200,000 more people in work.
That’s the equivalent of a fifth of all current vacancies.
So by making work pay, we are providing more of the staff we know many businesses are crying out for.
After all, releasing the locked-up talent in our communities is essential to economic growth.
Sir Keir Starmer has no plan
That’s why, since 2010, we’ve made sweeping changes to get people off welfare into work.
Lest we forget, under Labour’s broken benefit system, you needed a maths degree to work out if you were actually better off taking a job.
Some claimants saw as much as 90p in every £1 they earned snatched back by the system.
For thousands, work simply wasn’t worth the effort.
So we changed that. Through Universal Credit, we abolished the dreaded “16-hour rule”, boosted childcare support for working parents, and cut the rate at which benefits are withdrawn to smooth the journey into work.
The benefit cap we put in place, and welcomed by many readers of The Sun on Sunday, restored a basic but important point of fairness.
It ensured households on out-of-work benefits could no longer receive more than the average weekly wage.
As a result of our reforms we’ve seen more than four million people enter the workplace since 2010, unemployment halved, and a near record number of women in work.
Our action on benefits, including tougher sanctions that ensure claimants play by the rules, have been a success.
However, we know that, since the pandemic, too many people are falling out of work and on to sickness benefits.
In particular, the challenge today is people dropping out due to mental health conditions.
I believe poor mental health should not necessarily be a barrier to employment.
Part of the answer
In fact, a good job can be more than part of the answer.
That’s why I am rolling out the next generation of welfare reforms.
There will be changes to benefit assessments that will reduce the number of people on incapacity benefits by 371,000, cut the benefit bill by £3billion, and put thousands more people on a journey back to work.
Alongside this, my Back to Work Plan is increasing the number of NHS Talking Therapies and doubling Universal Support to ensure everyone gets the help they need.
And the change to the High-Income Child Benefit Charge announced last week — with 500,000 families now to receive more than £1,200 to help with the cost of raising a family — will smash the barriers many households face to increasing their incomes through work.
By contrast, Sir Keir Starmer has no plan.
One minute he is pledging a £28billion spending splurge on green projects, the next he’s kept the policy but ditched the price tag.
One minute he wants to scrap Universal Credit, the next minute he doesn’t.
But amid the chaotic lack of planning, one thing is clear.
Labour do not share the instincts of the British people on hard work.
Their proposals to “end” benefit sanctions send completely the wrong message.
And their soft touch on welfare would end up with more people parked on benefits — just like before — and your taxes rising to pay for it.
Ours is the fair approach that hardworking taxpayers rightly expect. Tax cuts to reward hard work. A benefit system that knows a hand up is always better than a hand-out.
We have a clear plan to get people back into jobs, reduce the reliance on overseas workers and grow the economy.
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Our plan is working — spreading opportunity and building a brighter future for Britain.
Don’t let Labour wreck it, and take us back to square one.
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