Work and Pensions Secretary Esther McVey has confirmed that some people will be worse off as a result of the introduction of Universal Credit.

Ms McVey declined to confirm or deny reports she had told cabinet colleagues that some claimants would lose out to the tune of £200 a month.

But challenged over a think-tank estimate that three million people will be about £1,800 a year worse-off due to the move to Universal Credit, Ms McVey told the BBC: “I have said we made tough decisions and some people will be worse off.”

Prime Minister Theresa May told the Commons on Wednesday that none of the two million-plus claimants due to be transferred onto Universal Credit in a “managed migration” starting next July would see reductions in payments, thanks to a £3bn transition protection fund.

A Downing Street spokeswoman denied that the PM had misled MPs, telling reporters: “Absolutely not. She was answering a question about people moving through the managed migration process.”

The fund will protect claimants moving from a range of existing benefits which are being replaced by Universal Credit. But claimants who report a change of circumstances, such as changing jobs, moving in with a partner or moving house, could see their payments altered.

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Former prime minister Sir John Major called for a rethink of the planned roll-out, warning the Government risks a poll tax-style backlash if its flagship welfare reform is seen as unfair.

The architect of the new system, former work and pensions secretary Iain Duncan Smith, said an additional £2 billion must be pumped into Universal Credit to make it operate as planned.

And Labour leader Jeremy Corbyn said the system needed “dramatic” change to ensure that no-one loses out.

Universal Credit replaces a range of existing welfare payments, but has so far been applied only to around 1 million new claimants or those with changed circumstances.

Work and pensions secretary Iain Duncan Smith
Iain Duncan Smith

Ms McVey defended the new system, but did not deny reports that she had told Cabinet colleagues that some claimants could be as much as £200 a month worse-off.

“I won’t say what I said in Cabinet,” she told the BBC.

“I had a very open conversation with my colleagues about how to support people.”

Sir John said he did not oppose the principle of the system, but thought there was ” a real danger that it will be introduced too soon and in the wrong circumstances”.

He told the BBC: “In order to introduce something like Universal Credit you need to look at those people who in the short term are going to lose, and protect them, or you will run into the sort of problems the Conservative Party ran into in the late 1980s.”

Former prime minister Gordon Brown warned earlier this week of “chaos” akin to the rioting which greeted the poll tax in 1990, but Sir John insisted he was not predicting violence.

He said: “If you have people who face that degree of loss, that is not something the majority of the British population would think of as fair, and if people think you have removed yourself from fairness then you are in deep political trouble.”

Gordon Brown (Image: Getty Images)

But a Government spokesman said: “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.”

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