DSPI Associate Fellow Fran Bennett sat on a panel of experts at a recent Treasury Committee meeting to give oral evidence about cliff edges in the benefit and tax system. The Committee’s interest had been sparked because of the way in which a failure to get universal credit also means missing out on the cost of living payment.
A ‘cliff edge’ can mean a small increase in income leading to a large loss of benefits or increase in tax, or both. MPs on the cross-party Committee - with some members of the Work and Pensions Committee also present - used the session to explore the impact of such cliff edges when it comes to free school meals and other ‘passported benefits’, universal credit and child benefit, amongst other topics. The Committee also discussed the potential impact of cliff edges on work incentives.
Fran Bennett warned about the dangers of sanctions on benefits, which led to people ‘staring into the abyss’ of a large and sudden drop in income. She discussed the loss of access to free school meals at a certain (low) level of earnings. She also drew on the ESRC-funded research conducted with colleagues at the University of Bath into couples’ experiences of universal credit to argue that the volatility of income caused by the calculation can discourage people from changing their working patterns, and sometimes even lead to ‘second earners’ giving up their jobs, to prioritise stability. In addition, Fran highlighted the negative impact of the high income child benefit charge, which leads to a high ‘tax’ rate as child benefit is withdrawn between certain income thresholds.
Fran Bennett commented afterwards: ‘Providing oral evidence is an excellent way of bringing research findings and policy analysis to bear on topical issues being discussed by parliamentary committees in order to try to hold governments to account’.
On the panel, Fran was joined by Tom Clougherty, Head of Tax at the Centre for Policy Studies; Deven Ghelani, Director at Policy in Practice; Helen Miller, Deputy Director at the Institute for Fiscal Studies; and Morgan Wild, Head of Policy at Citizens Advice. The panel was asked to provide follow-up written evidence about ‘cliff edges’ to the Committee.
You can view the full meeting or read a transcript here: Committees - UK Parliament