Thousands of part-time workers are at risk of having their benefits reduced after Chancellor Kwasi Kwarteng announced changes to universal credit rules in his mini-budget.

The move will force people to attempt to secure more work on a weekly basis or see their payments slashed.

It came amid a mini-budget in which the Chancellor announced sweeping tax cuts, including reversing the national insurance increase and scrapping a planned rise to corporation tax. He also announced an end to the cap on bankers’ bonuses.

Here’s how the change to universal credit will work.

How are universal credit rules changing?

Currently, universal credit claimants working up to 12 hours a week on the national living wage are at risk having their benefits reduced if they do not take steps to increase their earnings and meet regularly with a work coach.

Under the Chancellor’s plans, this is now set to be increased to 15 hours.

The change is expected to affect around 120,000 benefits claimants, and will come into effect in January 2023.

Certain groups will be exempt from the requirement, including those who are unable to work because of a disability or long-term illness.

Mr Kwarteng said: “While unemployment is at its lowest rate for nearly 50 years, the high number of vacancies that still exist and inactivity in the labour market is limiting economic growth.

“These gradual changes focus on getting people back into work and maximising the hours people take on to help grow the economy and raise living standards for all.”

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Labour’s shadow work and pensions secretary, Jonathan Ashworth, tweeted: “So Tory ministers think reason we have over a million vacancies is because the low paid aren’t working hard enough and need to be threatened with sanctions but bankers needs bumper bonuses. We need a serious plan to support people to return to work and increase labour supply.”

The Institute for Employment Studies said the Government’s plan for universal credit could push people out of work, adding that ministers misunderstood the factors behind the labour shortage.

Tony Wilson, director at the Institute for Employment Studies, told i: “These measures aren’t going to make any difference at all to the labour shortages that employers are facing. If anything they could make them even worse, by forcing people to change jobs or give up work entirely.

“The problem is that we don’t have enough workers, not that our workers aren’t doing enough hours. These labour shortages are holding back growth and fuelling inflation, which means living standards will be lower and interest rates higher for longer. What we urgently need is a proper plan to help the nearly two million people who are out of work, not looking for work, but want a job.”

How do your earning affect universal credit payments?

If you or your partner are employed, how much universal credit you get will depend on how much you earn.

Your universal credit payment will reduce as you earn more. For every £1 you or your partner earns, your payment goes down by 55p.

Use a the Government’s benefits calculator to see how increasing your hours or starting a new job could affect what you get.

There is no limit to how many hours you can work, but your payments will stop completely nce you earn over a certain amount.

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