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Out of work families can not afford the cut to Universal Credit

Out of work families can not afford the cut to Universal Credit
4 min read

The cut will reduce real terms support for an out of work family to the lowest level since Margaret Thatcher was Prime Minister.

Universal Credit has had a troubled journey since being announced by ministers in 2010. But its strengths have been plain during the pandemic. In a few weeks after the first lockdown in March 2020, the number of claimants doubled from three million to six. On some days, 100,000 new Universal Credit claims came in. The system – supported by thousands of rapidly redeployed civil servants – coped admirably. It was an impressive achievement.

Ministers in 2010 made a strong case for merging the different legacy benefits together, not least to simplify the system for claimants. There are, however, serious flaws with the design adopted for Universal Credit. A recent Work and Pensions Committee report highlighted the worst, which has driven the shameful growth in foodbank demand over the past decade: the five-week delay between applying for benefit and receiving the first regular benefit payment. That must be fixed.

But the current plan to reduce Universal Credit back to its pre-pandemic level, removing the £20 per week uplift which was – boldly and rightly – introduced at the first lockdown, could deal a decisive blow to the benefit’s reputation.

Somebody worrying about how to afford their next meal cannot focus on finding a job

It will reduce real terms support for an out of work family to the lowest level since Margaret Thatcher was Prime Minister. The economy is now 50 per cent larger in real terms than it was then. But the government’s proposal is that real terms support for unemployed families should be no larger at all.  

It will be at the lowest proportion of average earnings since the modern welfare state began in 1948.  The cut will take effect as prices surge – food prices, shown in the September inflation figures, and energy bills, with the price cap lifted. In real terms, unemployment support will be significantly less, when the uplift is removed, than it was before the pandemic.

The Work and Pensions Select Committee met a lone father of two children who told us the cut would “leave us with that big question again: do I go hungry, do my kids go hungry or do we keep the house warm?” Somebody worrying about how to afford their next meal cannot focus on finding a job.  

The cut will hit working families hard too. Working lone parents will lose £86 per month. One parent in full time work told us that: “If one of the children gets a party invite, which some weeks is my worst nightmare ... then I have to find the money for them to be able to do that. It is kind of a case of robbing Peter to pay Paul all of the time anyway. There have been months where I have to decide which bill I am not going to pay this month… The extra £86 a month has allowed for us not to be doing that so much.”

Taking the uplift away at a time of surging costs will reduce support for working parents and unemployed parents below the basic minimum which we all want people to have, to enable them to look for work, to look for a better job, to care for their children. We will instead inflict grinding hardship.

The secretary of state claimed, wrongly, you could make up the extra £20 by working an extra two hours per week. Parliament needs to understand what this will do to families, even if ministers don’t. It’s not just numbers on a spreadsheet.

Every former work and pensions secretary since 2010 opposes the cut. It will leave the system unable to do its job. I hope, even now, that wiser counsels will prevail.

 

Stephen Timms is the Labour MP for East Ham and chair of the Work and Pensions Committee.

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