Removing the £20 uplift to Universal Credit now would be a failure by government to recognise the reality of so many struggling families
Keeping the addition would add less than 3% to total spending, but make a vital difference to the lives of those on low incomes, writes Stephen Timms MP. | PA Images
With the impact of the pandemic still being keenly felt, removing the £20 increase now makes no sense for the idea of UC as a safety net for all - or for the millions of families who rely on it to get by.
In just six weeks’ time, hundreds of thousands of families, many with children, face the very real prospect of being swept below the poverty line.
The £20 weekly rise in Universal Credit (UC) has been keeping many afloat since its introduction at the start of the pandemic. The chancellor said when introducing the rise that it was designed to support ‘vulnerable households’ at a difficult time.
The factors which persuaded the chancellor to introduce the rise at the start of the pandemic all still apply. Its removal at the end of next month, when the economic effects of the pandemic continue to bite, would have a devastating impact on the lives of many.
The latest analysis from the Joseph Rowntree Foundation (JRF) concludes that half a million people, including 200,000 more children, risk being swept into poverty. Beneath those numbers lie innumerable personal stories of people facing hardship and adversity, juggling rent and utility bills with the costs of food and clothing.
These families desperately need to know that there is a way through financially for them, at a time when so much about the future still seems so unpredictable.
The Work and Pension Committee’s report this week calls on the government to provide certainty, and extend the £20 rise in UC and Working Tax Credit for a further year at the very least.
We recognise the reality of the public finances. The chancellor will have some very difficult decisions to make in the run up to the Budget next month. But removing the extra payment now would represent a failure by government to recognise the other reality, of so many families struggling.
A steady income is by far and away the best way of supporting people through the pandemic
There would be a substantial cost to maintaining the increase. The JRF estimates that keeping the £20 increase for a year would cost around £6.4bn. But this should be seen in the context of overall outlay on the pandemic response. The Treasury’s figure for total spending on coronavirus measures so far is over £280bn.
So keeping the addition would add less than 3% to total spending, but make a vital difference to the lives of those on low incomes. The actual cost would be lower if, as we hope, the government’s employment support programmes help people back to work and off UC.
There is also an economic case. This is money going to those on low incomes. It will be spent on essentials, supporting local businesses. It will provide a badly needed stimulus to the economy.
A steady income is by far and away the best way of supporting people through the pandemic. We must hope reports that one-off payments are being considered to replace the rise prove unfounded. The chancellor must listen to his colleague the work and pensions secretary and her concerns. Paying vulnerable households a lump sum would make it harder to manage their budgets, and presents risks of financial abuse.
It would also be very unfair. The person starting a job the next day would walk away with the lump sum, but the person losing their job the next day would get nothing at all.
The Committee has previously called for the £20 rise to be made permanent. We stand by that. But if Rishi Sunak cannot yet commit long-term, he should extend the rise by 12 months as a bare minimum – and preferably before he stands up in the House on March 3.
The impact of the pandemic is still being keenly felt. Removing the increase now makes no sense for the idea of UC as a safety net for all, or for the millions of families who rely on it to get by.
Stephen Timms is the Labour MP for East Ham and chair of the Work and Pensions Committee.