Budget 2018: Philip Hammond ploughs more cash into Universal Credit after outrage from Tory MPs

Posted On: 
29th October 2018

Philip Hammond today caved to pressure from angry Conservatives MPs and ploughed extra money into the under-fire Universal Credit system.

MPs had warned the Universal Credit system was plunging claimants into debt
PA Images

The Chancellor announced £2.7bn in funding to ease the impact of the controversial welfare reform after backbenchers from his own party threatened to revolt over the issue.

His move was welcomed by campaigners and the chair of the Work and Pensions Select Committee - but he was urged to go further and provide extra security for claimants.

WATCH: Labour's John McDonnell urges Tory MPs to vote down Budget over Universal Credit

Budget 2018: Tory MPs pile fresh pressure on Philip Hammond to reverse Universal Credit cuts

EXPLAINED: What is the Universal Credit row all about?

Universal Credit aims to simplify the benefit system and incentivise work, but it has been hit by numerous delays and suffered cuts to its funding by former Chancellor George Osborne.

The National Audit Office and the Public Accounts Committee had warned that without reform, the rollout of the benefit will plunge many claimants into debt.  

Tory MPs had urged the Chancellor to pump an extra £2bn into the system to plug gaps in its funding.

In a major climbdown today, Mr Hammond said he recognised the “genuine concerns” held by MPs and promised a package of “additional protections”.

He said he would pump cash into raising the threshold at which working claimants with health conditions or dependent children start seeing reductions in their benefits.

The money will start at half a million pounds in 2019/20 and reach £1.7m a year by 2023/24, with the threshold raised by £1,000 a year per claimant. 

He also promised to provide extra help for new sign-ups transitioning to the new system - worth £1bn over the next five years.

Mr Hammond said: “Universal Credit is here to stay, and we are putting in the funding it needs to make it a success. Because on this side of the House we believe that work should always pay.”

Work and Pensions Committee chair Frank Field said he was “grateful” for the help to constituents who were being “massacred by these benefits”.

But he said there should be further reforms to help claimants with issues such as childcare and paying back government loans.

Charity the Joseph Rowntree Foundation said the £1.7bn for the so-called work allowances would “help make Universal Credit a tool for tackling poverty, and ease the burden for low income families”.

Liberal Democrat DWP spokesperson Stephen Lloyd said the £1.7bn was not enough to plug earlier cuts - and argued “serious design flaws” in the Universal Credit system “were also not addressed”.

According to the Budget document, the Chancellor will also save some cash by delaying the end date for the rollout of the system to December 2023.


Elsewhere, Mr Hammond sparked anger after he announced a one-off £400m payout to schools so they can buy "little extras" for the classroom. 

Labour said the comment was "utterly insulting" after school budgets had suffered more than £3bn in cuts and head-teachers were "begging parents for money for basic supplies like books and stationery".

Public Accounts Committee chair Meg Hillier said it was an "insult to pupils and parents" and "simply a kick in the teeth".

And the Association of School and College Leaders said the comment showed "a complete misunderstanding of the prevailing funding pressures" faced by schools.

Mr Hammond told the Commons: "I recognise that school budgets often do not stretch to that extra bit of kit that would make such a difference.

"So today I am announcing a £400m in-year bonus to help our schools buy the little extras they need."