Stephen Timms – 2014 Parliamentary Question to the Department for Work and Pensions

The below Parliamentary question was asked by Stephen Timms on 2014-05-06.

To ask the Secretary of State for Work and Pensions, what support for the payment of mortgage interest will be available for universal credit recipients in low paid work; and if he will make a statement.

Steve Webb

Under the current system, low paid workers are able to supplement their earnings by claiming support from tax credits. However, tax credits do not make any allowance for mortgage interest payments. Similarly, when Universal Credit replaces the tax credit system, there will be no entitlement to help with mortgage interest during any period in which the claimant is in paid work.

However the earnings rules are far more generous in Universal Credit. This means that most people, particularly those on low incomes, have a significantly greater incentive to move into work than under the current system.

The vast majority of people claiming UC will be better off in work: even if they work part-time and even if they receive a low hourly rate of pay. For example, a lone parent receiving the average amount of mortgage interest who takes up a job that pays the national minimum wage will be better off than under the current system if he or she works just 7hours a week.