Brits set to lose out on £130 a year to help pay for Universal Credit

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BRITS could face losing out on £130 a year to pay for Universal Credit, it was suggested last night.

Philip Hammond is mulling whether to cave in to Tory pressure and cancel a planned increase in the income tax allowances in order to reverse cuts to welfare previously made by George Osborne.

This would delay or scrap a planned tax cut for low earners - costing every taxpayer extra.

The Tories promised to increase the level at which workers start paying tax from £11,850 to £12,500 by 2020.

And the higher income tax threshold is set to rise from £46,351 to £50,000 over the same period, pledges made in the Tory manifesto.

The Daily Telegraph says the money gained from putting off the tax cut would be ploughed into the Government's troubled welfare programme, Universal Credit.

Treasury sources said the report was speculation.

Yesterday Work and Pensions Secretary Esther McVey admitted that some Brits WOULD be worse off under the new system.

And both Sir John Major and Gordon Brown have spoken out against the new scheme this week, warning it could spark disturbances on the streets, and unrest as bad as the poll tax.

Iain Duncan Smith, the architect of the Universal Credit project, suggested yesterday that ministers reverse the planned £2billion of cuts made to the welfare budget, which were made by ex-Chancellor Mr Osborne in 2015.

He told The Sun last night: "Universal Credit as it stands is working well, rolling out well.

“But we should direct the money back into Universal Credit exactly as it was originally planned to be rolled out."

Some of the poorest Brits are set to lose out as they get transferred onto the new system from next summer.

But around 700,000 will get an extra £4,000 a year as the new system will be able to tell if they are eligible for more.

Universal Credit aims to roll six benefits into one, but has been beset by problems as its been put in place.

It's meant to incentivise people into work by cutting down the benefits as they take on more hours.

Tory MPs yesterday suggested they couldn't back Universal Credit's rollout as it stands.

Plymouth MP Johnny Mercer said: "Universal Credit was designed so that no-one would be worse off.

"Stop the tax-free allowance rise and re-invest into Universal Credit, or I can’t support it. [It is] not politically deliverable."

Ministers are set to put £3billion of cash into "transitional protection" so those going onto the new benefits won't see a drop in their incomes.

The Chancellor is under pressure to find more money for Universal Credit and the NHS as the Budget inches nearer.

He must also find cash to pay for the fuel duty freeze promised by Theresa May at the Tory party conference last week.

A Government spokesman said last night: "Universal Credit is based on the sound principles that work should always pay and those who need support receive it.

"We are listening to concerns about achieving these principles, improving the benefit, and targeting support to the most vulnerable, including for around one million disabled people who will receive a higher award under Universal Credit.

"This is a far cry from the confusing, unreliable legacy system that failed to pay claimants their full entitlements and consigned people to a lifetime on benefits."