The UK Government’s reported plan to replace the £20 a week uplift to Universal Credit with a single one-off payment of up to £1,000 would be “bad policy” and risks plunging a further 500,000 people into poverty and hardship.
This is according to a damning report from the Joseph Rowntree Foundation (JRF) published today (2 February 2021), who have joined a growing chorus of charities and experts in calling on the UK Government to maintain the uplift and extend it to legacy benefits.
The report warns that failure to make this uplift permanent when “the worst of the unemployment crisis is still to come” could be harmful to the economy, especially at a time when economic stimulus is desperately needed to improve the likelihood of a swift bounce back in terms of jobs and family finances.
According to the latest official statistics from the Office for National Statistics (September to November 2020), the number of unemployment people has reached 5% of the populace or 1.7 million people. The report warns that ending the Universal Credit “lifeline” increase while the job market remains in crisis will accelerate debt and risk rising destitution.
It states that: “Whipping away this lifeline in April will cut incomes by £1,040 a year for 6.2 million families, resulting in 500,000 more people being pulled into poverty, including 200,000 children.
“By extending the uplift for a few months, the Government would be doing nothing to prevent a surge in poverty but would simply delay it to a time when we are still in economic crisis and unemployment will be even higher. The £20 lifeline has not only supported families’ incomes but has also provided an essential boost to the economy.
“By targeting those at the bottom of the income and wealth distribution, investment in this uplift is more effective at generating consumer spending than other options such as tax cuts.
“The need for this economic stimulus is not over; the economic forecasts for GDP in 2021 are no rosier than for unemployment. Its removal will do the opposite, acting as a negative economic stimulus.
“We expect the impact to be significant as millions of families adjust their budgets and cut spending.
“The impact of a cut would be greatest in the North of England, Wales, the West Midlands and Northern Ireland, areas that already had high rates of poverty and have been worst affected by this economic downturn.
“This means many previous ‘Red Wall’ constituencies, where the Government has pledged to level up, would instead see a further large blow to their livelihoods and local economies, hampering recovery and any ambitions to level up.
Responding to reports that the Chancellor (pictured above) plans to end the £20 rise in Universal Credit in April, Helen Barnard, Director, Joseph Rowntree Foundation said: “Giving a lump sum while cutting regular payments would not be the lifeline households need when facing a long period of uncertainty.
“The £20 increase in Universal Credit has been the right course of action, given that the social security system wasn’t sufficient to prevent families being pulled under, especially as job losses hit workers on low incomes the hardest. Cutting that lifeline now would be the wrong decision and will reduce the level of support for people out of work to the lowest level since 1990.
“Unemployment is projected to peak later this year so ending the lifeline now and giving a lump sum will not help people for whom the worst impact is yet to be felt. People living on a low income have seen their incomes fall, and fall fastest over the last decade, and face an extremely challenging year ahead of them.
“If the Chancellor wants to wrap the nation’s arms around families facing a long period of financial insecurity he would keep the £20 for a further year rather than cut benefits and give a lump sum, ensuring that everyone who needs support during the year can benefit.
“Families need the certainty of being able to plan their budgets in advance. Rather than cutting Universal Credit in April, the Government should recognise that our social security system needs to adequately support us through difficult times, and must extend this same support to those on legacy benefits.”
The SNP’s newly appointed Work and Pensions spokesperson David Linden MP has urged the UK Government to maintain the £20 a week uplift and extend it to legacy benefits.
He said: “The UK’s unemployment rate is rapidly increasing – and the JRF warns the worst is yet to come. The Tory government must urgently invest in the UK’s social security net – not slash it as they spent the last decade doing.
“It is crucial that the Chancellor confirms he will make the £20 uplift permanent and extend it to legacy benefits – as part of a wider package of measures to put money in people’s pockets. Anything less than that will be another stain on the UK’s reputation when it comes to tackling poverty.
“And he must do that now to give people much needed assurance and certainty over their finances instead of waiting until the March budget.
“Tory cuts and delays have already caused thousands of unnecessary redundancies, and left many people struggling to get by – including the 3million who have been completely excluded from support. There must be urgent support for these forgotten millions who have been left behind.
“The SNP Scottish Government is using its limited powers to do what it can to provide help and support to those who have fallen through the gaps of coronavirus support, have lost income or become unemployed but the powers and levers to make a real difference in ensuring no-one is left behind in this pandemic lie with Westminster – I am urging the Tories to use them to put money in people’s pockets and protect livelihoods.
“But Scotland shouldn’t have to wait for Westminster to act. Only with the full powers of an independent country can Scotland build the fairer, more equal country we all want to see.”