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Cutting the Universal Credit uplift will create hardship for families both in and out of work

Cutting the Universal Credit uplift will create hardship for families both in and out of work
4 min read

Let's reduce the welfare bill by supporting people to progress and improve their lives, not by cutting support that should be there when it’s needed most.

This week the government confirmed they still intend to go ahead with the planned £20 a week cut to Universal Credit.

This overnight cut will impact 6 million households, cutting £1,040 from their annual incomes. The Joseph Rowntree Foundation have predicted that this will pull half a million more people into poverty, including 200,000 children. 

The government is saying we need to focus on getting people back into work, and they are right. The labour market is rebounding strongly. However, currently a third of those on Universal Credit are working families, and when Universal Credit is fully rolled out, that is expected to reach half. Getting into work is not the issue facing these families. These are exactly the workers on low pay that Conservatives should champion. But they are facing a sudden and sharp cut to their household incomes later this year.

Ministers state that they were clear that the £20 uplift was always a temporary measure and that, like other emergency measures, it should now end. However, this is not at all like furlough – the need for a strong social security system will continue as we go back to normal. This £20 increase was a vital investment in the adequacy of our social security system. The logical explanation for the decision to increase rates was that previous rates were too low to adequately protect families. 

In the years leading up to the crisis, our social security system was squeezed by years of cuts and freezes. At the beginning of 2020, our main rate of out of work support was at its lowest level in real terms since 1990, and its lowest ever as a proportion of average wages. Despite increases to the National Living Wage and record employment, we saw a rise of in-work poverty. Earnings were increasing but families with low or insecure pay were seeing their overall incomes stagnating or even falling, at least in part due to cuts and freezes to social security. 

Let’s not repeat the mistakes of the past by reducing support to those who need it most

I, along with all the previous Work & Pensions Secretaries of State since 2010, think that the system was squeezed too much and the incomes of the lowest income families in our country, fell too far. This week we wrote to the Chancellor urging him to keep the investment in the system - we know that £20 has been essential to allow people to live with dignity. 

If we plan to level up and build back better, we need a social security system that protects people when the unexpected happens, but also gives people the stability and security they need to improve their prospects – taking risks and seizing new opportunities. 

By bringing those seeking work and those in-work together onto one benefit, Universal Credit gives security for families as they move into work and as they progress, and it is designed to ensure that it always pays to work. Cutting it will not incentivise work, as some like to think, but will simply create hardship for families both in and out of work. 

A cut of this scale to the main rate of benefits like this is unprecedented, which should be a concern to all in my party. Taking income away from millions of the lowest income families cannot be right. 

There are lots of challenging financial decisions to be made in the months ahead, but let’s not repeat the mistakes of the past by reducing support to those who need it most. Welfare spending has increased during this economic crisis, as you would expect it to with millions more needing to turn to the system. However, this will fall rapidly if we get our recovery right by creating jobs and supporting people into them. 

Let's reduce the welfare bill by supporting people to progress and improve their lives, not by cutting support that should be there when it’s needed most.

 

Stephen Crabb is the Conservative MP for Preseli Pembrokeshire.

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