Tomorrow, on the 6th of October 2021, the £20 Universal Credit and Working Tax Credits Uplift will end; which the House of Lords Library reports will result 500,000 people, including 200,000 children, being pushed below the poverty line. This cut in the social safety net is the largest since World War 2, indeed, the largest cut since the introduction of the modern welfare state.
In the years leading up to Covid-19, low income families had suffered through year after year of economic stagnation caused by below-inflation pay rises and cuts to social security. These cuts will disproportionately impact low income earners, with 60% of families in the bottom 30% of the country’s income distribution, along with 60% of one-parent families expected to experience an overnight cut to their benefits. Research conducted by YouGov on behalf of the Trussell Trust, discovered that 72% of UC recipients said that the extra £20 made buying the essentials for life much easier during both a pandemic and the associated economic recession.
At the start of the Covid-19 pandemic, the government took prompt action to combat the loss of earnings caused by the furlough schemes and lockdowns by increasing the standard UC and WTC allowance by £20; worth more than £1,000 a year to each vulnerable household it supported. The extra £20 gave some the UK’s poorest citizens the resources to live with dignity in what were unanimously accepted to be extremely challenging times. For the average UC recipient, the £20 Uplift accounts for 12% of their entitlement; whereas for other claimants, that figure is as high as 21%.
Although the £20 Uplift was only intended as a temporary measure during the disruption caused by the Covid-19 pandemic, the government’s decision not to make the increased UC and WTC payments permanent has been greeted with widespread condemnation. Whereas one-off payments have been offered, such as the £500 Test and Trace Support Payment for those having to self-isolate, these payments only serve to delay poverty rather than actually deal with it.
As part of SOFEA’s charitable activities, especially our endeavours like the Community Larder and the Kickstart Scheme, we see a great deal of the difficulties experienced by UC and WTC recipients first hand. Many of our Community Larder members come from low income communities where UC or WTC form a sizeable percentage of their income. While the end goal of the Kickstart Scheme is to get vulnerable youngsters off Universal Credit altogether; as the planned cut looms, their concerns regarding paying their bills, clearing their debts and saving for the future have all become expenditures that have become harder to budget around.
We’ve also witnessed a rising level of worry among our youngsters who are involved our Kickstart Scheme. As prerequisite to being offered a place as a Kickstarter, the youngster must already be claiming Universal Credit. The youngsters we work with in this scheme, typically between the ages of 16-24, almost always come from low income communities or other vulnerable backgrounds. While entering the labour market for the first time under normal circumstances can be daunting enough; but with the Uplift about to be cut, it can be particularly challenging for our youngsters to find meaningful employment in order to continue their personal and professional development and gain independence. When approached for this article, our young people raised similar apprehensions surrounding their bills and debts in light of the proposed cut. The vast majority anticipated that they would have to cut back on luxuries and the activities they enjoyed spending money on, which as we’ll discuss later, is counterproductive to helping the economy stabilise after the Covid-19 pandemic.
How SOFEA is impacted more broadly by the £20 Uplift being cut, at this point, can only really be speculated. Starting from humble beginnings, the uptick in Community Larder membership is due, in part, to more people becoming aware of the services we offer. However, if there’s a higher than expected increase in the number of people requiring our services in the aftermath of the £20 Uplift being stopped, then it’s a fair assumption to make that doing a weekly shop at a supermarket may no longer be a financially valid option for them.
Data gathered by the Trussell Trust, the UK’s largest operator of food banks, paints a picture of the potential struggles UC and WTC recipients could expect to face if the £20 Uplift is discontinued. Their research suggests that one million UC and WTC recipients would be left with no other choice but to use food banks; with 20% believing that there is a high chance of them requiring the support of food banks if the Uplift is removed.
Of those surveyed by the Trussell Trust, 41% of those currently claiming UC are worried that they will have to cut back on food for themselves in order to feed their children. While 13% of UC recipients are afraid that they will have to cut back on food for their children. It isn’t just access to food that’s an issue either; with winter looming, clothing and heat are essentials that vulnerable people should never be forced to choose between. The Trussell Trust estimates that 365,000 people aged 55 or over will have to reduce the number of hours they heat their homes which could put their health at serious risk.
© Trussell Trust, 2021
In regard to arrears, debt and financial security, the Trussell Trust witnessed a reoccurring theme among UC/WTC Recipients when asked about losing the £20 Uplift: the loss of income is counter-productive to helping individuals achieve financial stability in the wake the Covid-19 pandemic. The recipients they spoke to were concerned that they would fall behind on their bills, forcing them to take on even more debt and leaving them unable to invest in their futures. The Citizens Advice Bureau discovered that the number of people who use their services for handling their debts who receive either UC or WTC, would increase from 43% to 75%.
UC and WTC Recipients also voiced their concerns about not being able to pay their housing costs and face the prospect of being evicted. Others mentioned the high likelihood of struggling to pay bills like Council Tax or having their gas, electric or water shut off. Further findings by the Trussell Trust reveal that, if the £20 Uplift was stopped; 19% of UC/WTC Recipients wouldn’t be able to pay for their housing, while 27% would struggle to pay their Council Tax and utilities bills. To avoid these scenarios, 28% said that they would be ‘very likely’ to sell their possessions.
Those who responded to the Trussell Trust said that in order to try and overcome this financial shortfall, they would likely have to shoulder additional debt from credit cards or loan companies. The implications of this would mean that achieving any kind financial or housing stability, paying off their debts or finding meaningful employment would be an even harder task.
Earlier this year, both The Independent newspaper and The Poverty Alliance filed Freedom of Information Requests with the Department of Work and Pensions (DWP) in regard to a study carried out to better understand the impact of removing the £20 Uplift. The DWP rejected both requests, on the grounds that the ‘DWP is satisfied in this instance the public interest in maintaining the exemption outweighs the public interest in disclosure’.
Speaking with The Independent, Jonathan Reynolds, the Shadow Secretary of State for Work and Pensions, remarked on the DWP’s decision, “The public deserve to know what assessment the government has made on the impact this cut will have on poverty. Britain has had the worst recession of any major economy because of this government’s incompetence and indecision – yet they want struggling families to pay the price.”
The previous six Conservative Work and Pension Secretaries, including the architect of Universal Credit Sir Iain Duncan Smith, have written an open letter to Rishi Sunak in an attempt to persuade the Chancellor to change course. In the letter, Sir Iain is quoted as saying ‘A failure to act would mean not grasping this opportunity to invest in a future with more work and less poverty and would damage living standards, health and opportunities for some of the families that need our support most as we emerge from the pandemic’.
In an open letter addressed to Prime Minister Boris Johnson, spearheaded by the Joseph Rowntree Foundation, a hundred organisations consisting of charities, paediatricians, public health experts and think tanks said that the decision would ‘pile unnecessary financial pressure on around 5.5 million families, both in and out of work’.
Research conducted by the Child Poverty Action Group (CPAG) and Action For Children analysed a series of sole-earner, low and middle income occupations to assess the impact of cutting the Uplift. In their findings, not only did the £20 UC/WTC Uplift helped mitigate some of the financial costs to recipients after a decade of social spending cuts, nearly a hundred in all at an average of £750 per year; but also losing the Uplift would significantly affect people with children, especially those with larger families. Such is the way that UC payments are allocated based on income, those earning the least will lose the most. On average, with the loss of the £20 Uplift, the benefits losses experienced by claimants will be nearly £1,800; a loss increase of 140%.
© Action for Children, Child Poverty Action Group (CPAG), 2021
Compounding all of this is the fact that the less money people have their pocket, the less money there is in their local economy at a time when economic recovery, especially in some of the poorest areas of the UK, is paramount.
So what is to be done to prevent so many vulnerable people from slipping through the cracks? Essentially, all that needs to happen is for the £20 Uplift for Universal Credit and Working Tax Credits to remain in place, permanently. This is the right thing to do as the extra £20 serves as a literal lifeline to those who were already struggling financially in the face of rising costs, wage stagnation, benefit cuts, two financial recessions and a global pandemic. In addition, the £20 Uplift should be extended to people claiming legacy benefits such as Employment and Support Allowance (ESA), Jobseeker’s Allowance (JSA) and Income Support as these groups are perpetually excluded; despite the government’s pledge to level up and invest in exactly these sorts of disadvantaged groups.
The alternative is for the government to allow the £20 Uplift to expire. The planned cut will cause an instantaneous surge in needless hardship that will drag hundreds upon thousands of people into poverty, or deeper into poverty, all exacerbated by the Covid-19 pandemic. To proceed as planned with these cuts would mitigate all progress made to bounce back from the post-2010 austerity measures, which would continue to leave local governments financially exposed.
So what are the public’s thoughts on the £20 Uplift? Prior to the pandemic and the economic crash that followed in its wake, a 2019 YouGov survey commissioned by the Trussell Trust, the largest such study ever undertaken with over 12,000 people surveyed; with the goal to gage the UK population’s thoughts on poverty, hunger, inequality and the government’s policies to combat them. The findings conclude that 66% of the UK population believes that poverty has worsened in the last five years, 75% believe that the gap between rich poor has grown wider and 70% say that the cost of essentials has increased. 55% of those surveyed agree that the government is primarily responsible for addressing food poverty in the UK, while 61% agree that those living in poverty are doing so as a result of government policies. In regard to poverty; the survey also found that 47% of Brits say that poverty is the most important issue facing the country right now, with 85% agreeing that everyone should have enough money to purchase the essentials they need. Encouragingly, 73% of people in the survey were confident that food poverty could be ended.
A 2020 Ipsos MORI survey commissioned by the Health Foundation concluded that 74% of the population supported the £20 UC/WTC Uplift during the pandemic. The majority of the population (59%) support keeping the Uplift as a permanent feature of the UC/WTC allowance, while only a mere 20% supporting the government’s plan to abolish it.
Despite the overwhelming support for the continuation of the £20 Uplift coming from the electorate, opposition government, charities, public health experts, paediatricians and think tanks; at the time of writing, the Uplift is still set to expire on the 6th of October. If the government wants to ‘Level Up’ and ‘Build Back Better’, £20 would be a start.