Cutting Universal Credit will undermine the government’s levelling up agenda
Pushing benefit levels lower will hurt working families and take money out of local economies, not accelerate our recovery.
As MPs return to their constituencies for the summer, millions of families are set to hear that their Universal Credit will drop by over £1,000 a year from October. Families disproportionately located in areas the government has said it wants to “level up”.
An extra £20 a week doesn’t just stop people having to choose between putting food on the table or keeping the lights on. It gives a critical cash boost to the very regions identified as most at risk of being ‘left behind’. For this reason, a cut to Universal Credit is at odds with the government’s own agenda of narrowing the inequality gap.
Levelling up is a slippery term. It can cover any number of things - regenerating town centres, faster broadband, better jobs and tackling the skills deficit. But these sit under one umbrella: improving living standards for the people and places most in need.
“Levelling up” has a hollow ring when simultaneously dropping benefits for those on the lowest incomes
People are one and a half times more likely to claim Universal Credit in places the government has said it wants to invest in: the ex-industrial areas, deprived towns and coastal communities prioritised for its levelling up fund. Places like Wolverhampton, where nearly one in four working age people are claiming Universal Credit and a cut would take £32 million a year from the local economy.
“Levelling up” has a hollow ring when simultaneously dropping benefits for those on the lowest incomes. Just look at the numbers. Going ahead with the cut means that if every penny of England’s £4 billion levelling up fund went to the areas the government says are most in need, they would still be out of pocket. For each £1 investment from the Levelling Up Fund, £1.80 would be taken from the local economy through the cut to Universal Credit.
Of course, levelling up is about more than just geography. It’s about tackling inequalities. More than a third of people who’ll be hit by the cut are already in jobs but still rely on Universal Credit to make ends meet. Some can’t work because of a disability or caring responsibility. Others have weathered furlough or shielding and are picking up the pieces from this crisis.
Universal Credit offers targeted support for people on the lowest incomes as they enter or drop out of work. That’s why investing in it must be a keystone of our recovery.
The Chancellor’s counter-argument to keeping the £20 increase is that the focus must be jobs. Supporting people into the labour market is vital and job creation schemes are welcome. But frontline staff at Citizens Advice know a job doesn’t mean income security, particularly when it’s low paid or zero hours. Pushing benefit levels lower will hurt working families and take money out of local economies, not accelerate our recovery.
Investment in infrastructure - transport, high streets and community spaces - is important when it comes to closing the gap, and delivering this ambition will take time. It’s likely to be years before we’re able to judge whether the government’s promised regeneration plans have succeeded in creating the economic growth required to improve living standards in ‘left behind’ areas.
In the meantime, UK benefit levels as a percentage of earnings are already one of the lowest in Europe. Critical indicators of quality of life such as healthy life expectancy, child poverty and levels of debt are going in the wrong direction in many parts of the country.
Despite a looming October deadline, it’s not too late for the government to change its mind. Keeping the £20 increase to Universal Credit is the single best way of shoring up a more equal recovery from this crisis and making good on the “levelling up” promise.
Dame Clare Moriarty is chief executive of Citizens Advice.
Get the inside track on what MPs and Peers are talking about. Sign up to The House's morning email for the latest insight and reaction from Parliamentarians, policy-makers and organisations.