The eight per cent discount brings the rate in keeping with the unique plans for Universal Credit launched by Sir Iain Duncan Smith, then the Work and Pensions Secretary.
It comes as the Government ends a non permanent £20 per week uplift for Universal Credit claimants, which was launched throughout the Covid pandemic and gave every claimant £1,040 per year.
Mr Sunak has confronted criticism from opposition MPs and figures from inside his personal celebration for the choice to finish the uplift.
“The Universal Credit taper withdraws support as people work more hours,” he advised MPs. “The rate is at present 63 per cent – so for each further £1 somebody earns their Universal Credit is decreased by 63p. Let us be in little doubt – that is a tax on work, and a excessive rate of tax at that.
“To make sure work pays, and help some of the lowest income families in the country keep more of their hard-earned money, I have decided to cut this rate, not by one per cent, not by two per cent, but by eight per cent.”
Following his assertion, Rachel Reeves, the shadow chancellor, advised the Commons: “Families struggling with a cost of living crisis, businesses hit by a supply chain crisis, those who rely on our schools and hospitals and our police… they won’t recognise the world the Chancellor is describing. They will think he is living in a parallel universe.”
Paul Johnson, the director of the Institute for Fiscal Studies suppose tank, mentioned the coverage offered “trade-offs as ever”, including: “It improves work incentives for current recipients but will drag more into the system.”