The significance of the Universal Credit taper rate cut

Boris Johnson and Rishi Sunak have always been keen to stress that they are low-tax Conservatives — declarations that have previously sounded a bit like St Augustine’s prayer for the Lord to make him virtuous, but not yet. But the Budget announcement that the Universal Credit taper rate will be cut from 63 to 55 pence is a significant tax cut and one aimed at those most in need of it.

When the Tories were in opposition, David Cameron railed against the 96 per cent marginal tax rate facing people moving from welfare into work. Universal Credit, introduced by the coalition government, was meant to solve this problem. It did reduce that rate, but the working poor still faced a far higher marginal tax rate than those paying the top rate of tax. Faced with the expense of moving to this new system, George Osborne kept the taper rate high, blunting the purpose of the reform, which was supposed to ensure that work always paid.