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The Chancellor must make the Universal Credit uplift permanent

This trend of ‘in work’ poverty has shown that just getting people into jobs is not a guaranteed route out of poverty, writes Diana Johnson MP. | PA Images

4 min read

It would be economically irresponsible to take money away from people right now. The government must support people for as long as they need it.

Next week the Chancellor will announce his Budget that will outline the government’s tax and spending plans for the next financial year 2021-22.

In the Budget, I sincerely hope that the reports that Rishi Sunak is going to extend the Universal Credit uplift of £20 for another six months are proven to be true.  

Whilst we are still in the midst of this Covid-19 crisis, with millions of people either out of work, furloughed, or in insecure zero-hour contract work, it is the worst time to cut that vital financial support.

However, I am going one step further and calling on the Chancellor to make the £20 uplift permanent. My own constituency is an example of why this policy makes sense both in terms of supporting families and economically.

Since the outbreak of the Covid, Universal Credit has become a lifeline for many households. In my constituency of Hull North, the number of claimants has almost doubled in the last year. Almost 40% of Universal Credit claimants are in work. In recent years, many of those in work have still found themselves living in poverty. This trend of ‘in work’ poverty has shown that just getting people into jobs is not a guaranteed route out of poverty in recent years.

The government should not make people choose between eating or heating at a time when food banks have never been busier

The Office for Budget Responsibility predicts that by the end of 2021 unemployment could reach 11.9%. That would be as high as the record peak of 1984.  Hull North has already seen unemployment increase from 3,227 in January 2020 to 5,695 in January 2021 amongst the working age population aged 16 to 64. The trend remains upwards.

There is the danger in coming years of a new wave of young people not in employment, education, or training – a new generation of NEETs.

The government must provide the assurance to people that if they find themselves out of work, or in part-time work that doesn’t cover their bills, adequate support will help them to get through tough times.  

The Universal Credit uplift of £20 amounts to three days worth of food or seven days worth of energy bills for a household in Yorkshire and the Humber. Taking that away from people should be inconceivable at this time. The government should not make people choose between eating or heating at a time when food banks in Hull have never been busier.

It would be economically irresponsible to decide to take money away from people during an economic downturn caused by the worst public health crisis in a century. This is the moment that the government needs to provide the most support for people. 

Post-Covid, to kickstart our local economy and recover from the economic downturn, we need people to have enough money to be able to spend and boost local businesses. This means supporting incomes and not ramping up taxes for those on lower and middle incomes.

Citizens Advice estimate that the Universal Credit uplift of £20 a week represents £11.7 million of potential spending in my Hull North constituency alone. That would be a welcome boost to local businesses who have seen their profits slashed and who have had to subsequently let workers go.

It is particularly striking that the Resolution Foundation has published figures that show taking away the £20 uplift would mean a return to the lowest real terms benefit levels since 1990-91 – following the changes made by governments since 2010. Shockingly, it would also represent the lowest ever benefit levels relative to average earnings.

People do not need the additional anxiety of temporary assurances from the Chancellor, with reviews coming every few months. Instead of political games and glossy PR, people need a proper commitment to financial security now. 

We want to win the war against Covid and then win the peace by getting people back to work and back into study. This involves supporting people now and for as long as they need it.

 

Diana Johnson is the MP for Kingston upon Hull North.

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