Monday 02 August, 2021

Planned Universal Credit cut will leave millions unable to afford a minimum living standard

UK Government facing mounting pressure to scrap planned cuts to Universal Credit.

According to a recent analysis, the proposed £20-a-week reduction to Universal Credit in October would result in out-of-work families with children getting less than half of the money necessary to maintain an acceptable level of living, while people without children will receive around a third.

The yearly Basic Income Standard for the United Kingdom in 2021 (MIS) report, based on research conducted by Loughborough University’s Centre for Research in Social Policy for the Joseph Rowntree Foundation, serves as a benchmark for the UK’s minimum living standards.

It is the result of extensive consultations with members of the public on what they believe we all require in order to reach an acceptable quality of life.

The impending cut to Universal Credit will decrease the value of out-of-work benefits to their lowest levels on record in comparison to what the public considers to be an adequate income.

If adopted, it would lower the value of this assistance to 55% of MIS for a couple with two children aged 3 and 7, and to 33% of MIS for a single individual of working age without children. Working families on low incomes would also experience a significant reduction in help.

JRF said that certain working parents have been able to move closer to MIS in recent years as a result of improvements to the National Living Wage, the £20-per-week boost to Universal Credit, and more assistance for childcare under Universal Credit compared to the old system.

But JRF warned that if Universal Credit is reduced, the consequent increase in earnings risks being reversed for the majority of families that have benefitted.

In Scotland, families are also beginning to benefit from the Scottish Child Payment, which is currently available to low-income parents of children under the age of six.

The full rollout to all children under the age of 16 is scheduled for late 2022, and the Scottish Government committed during the election to boost it to £20 per week per kid, although without providing an implementation date.

However, the impact of that doubling will be nullified for the majority of families if the UK Government cuts Universal Credit.

Additionally, the study offers a troubling picture of how low-wage jobs and insufficient social security combine to create severe financial risks for single parent households and single individuals without children.

Chris Birt, Deputy Director for Scotland at the Joseph Rowntree Foundation, said: “We urgently need to restore public confidence by investing in adequate social security support for families in Scotland. It’s not too late for the UK Government to do the right thing and keep the £20-a-week increase to Universal Credit and prevent millions of families being left seriously unable to meet their needs.

“If this cut to Universal Credit goes ahead in October, all the promised doubling of the Scottish Child Payment will achieve is to reverse the effects of this damaging cut.

“In the face of this financial risk to low-income families, it is vital the Scottish Government doubles this payment as soon as possible to help us reach our child poverty targets.”

Commenting, the SNP’s Depute Westminster Leader and Equalities spokesperson, Kirsten Oswald MP said: “If the Tory government pushes ahead with these cuts – which they seem intent on doing – it will leave millions across Scotland and the UK worse off, exacerbate poverty and inequality, and put beyond doubt that they have absolutely no intention of building a fair recovery from Covid.

“Boris Johnson and Rishi Sunak are not only threatening Scotland’s recovery by imposing Tory austerity cuts on family incomes, but their actions will actively undermine anti-poverty measures implemented by the Scottish Government.

“I am urging them to U-turn on these plans, make the Universal Credit uplift permanent and extend it to legacy benefits.”

She added: “This reports also lays bare the serious financial blow single parent families – who are already disproportionately impacted by the UK’s welfare policies – could see if the cuts go ahead.

“Even with a full-time job on the National Living Wage, a single parent with two children aged 3 and 7 will be £66-a-week short of the Minimum Income Standard.”

A couple with two children aged three and seven years can achieve MIS if both parents work full-time at the National Living Wage or within 5% of this level if one parent works full-time and the other part-time.

However, only slightly more than one in four couples work full-time, sometimes owing to a lack of appropriate employment or other difficulties such as daycare availability or family health conditions.

Additionally, there are indicators that the cost of living is growing once again following a period of low inflation.

A family with children experienced a roughly 2.5 percent increase in their basic cost of living, excluding housing and daycare. While rent inflation was modest, childcare expenses increased by 3% to 4% for pre-school nursery spaces, and council tax increased by an average of 4%.

With the exception of the £20 rise to Universal Credit, this implies that the cost of living is increasing faster than social security benefits, which were only increased by 0.5% in April 2021. (in line with Consumer Price Inflation back in September 2020).

This year’s research aimed to ascertain how the public’s perceptions of what constitutes an acceptable level of life may have shifted as a result of the epidemic.

While the epidemic has had a significant impact on people’s lives, the public continues to emphasise the critical nature of a secure income that enables individuals to engage fully in society.

There may be substantial changes impacting minimal budgets in certain areas of life, such as shopping and technology, in the future, but it is too early to determine their long-term influence.

Abigail Davis, one of the report’s authors and Associate Director of Loughborough’s Centre for Research in Social Policy, said: “What we’ve heard from the members of the public drawn from across our society is that what’s needed for a minimum socially acceptable standard doesn’t fundamentally change, even under circumstances as challenging and unprecedented as these.

“But as COVID constraints lift for many, it’s worth bearing in mind that for a lot of households the restrictions of not being able to go out, take kids to after school activities or go on a family holiday remain because those are the things people go without when there isn’t enough to make ends meet.

“Taking money away from low-income households will make it even harder for them to meet this standard of living.”

Jonathan Reynolds MP, Labour’s Shadow Secretary of State for Work and Pensions, said: “The Government’s plan to cut Universal Credit for millions of families by £1,000 a year is morally and economically wrong.

“Under this Government millions of children are already living in poverty; this cut will only make things harder.

“It is time the Government saw sense, backed struggling families and cancelled their cut to Universal Credit. Labour would replace Universal Credit with a fairer social security system .”

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