The £20 uplift in Universal Credit and Working Tax Credit has been a lifeline for many families as they’ve struggled to get through the coronavirus storm – but it’s due to end in April 2021. To keep families afloat, the Government must keep doing the right thing and keep the lifeline, says Helen Barnard.
As the Government approaches the Autumn Budget and begins to make plans for our recovery, the coronavirus storm continues to rage around us. Over the coming weeks the furlough scheme will unwind, and we expect another wave of job losses and cuts to incomes.
Back in March, the Government rightly acted swiftly and compassionately, recognising the need to invest in our social security system to hold us steady during an economic crisis, and increased the standard allowance of Universal Credit and Working Tax Credit by £20 a week.
Even with this increase, many families have struggled through the last few months, cutting back on essentials and getting into debt, but this lifeline has allowed them to keep their heads above water and helped prevent a surge in poverty.
However, this was a temporary increase. It is due to end in April 2021 unless the Government commits to making it permanent this autumn.
Keep the lifeline and strengthen social security
Our new analysis shows that whipping away £20 a week will mean around 16 million people lose £1,040 from their annual budget overnight, and 700,000 more people are likely to be pulled into poverty. People already in poverty and already struggling to stay afloat will face severe hardship, with half a million more likely to be plunged into deep poverty (more than 50% below the poverty line).
We must keep this lifeline for people on Universal Credit and Working Tax Credit. But we also need to see it thrown to people on legacy benefits, who have so far been left adrift – buffeted by the same rough waves without a strengthened lifeline.
Currently, the additional £20 per week does not go to people claiming legacy benefits such as Employment and Support Allowance, Jobseeker’s Allowance and Income Support. The majority of people claiming these benefits are sick or disabled and carers who – for a long time – have unjustly faced a much greater risk of poverty and have been most at risk during the COVID-19 pandemic.
By extending this lifeline to those of us on legacy benefits, the Government can boost the incomes of 1.5 million people, including 300,000 children in some of the families who are most at risk.
As we feel the impact of the pandemic on jobs and incomes, it’s clear that we cannot afford to cut this lifeline at precisely the time when unemployment is rising, and many of us are facing a growing risk of poverty.
Now is the moment to help families stay afloat not cut them adrift.
Now is the moment to help families stay afloat not cut them adrift. Even the most optimistic forecasts do not expect the labour market to bounce back immediately, which means that opportunities to make up income through work will be limited for the next year, if not longer. We know that a lack of opportunities to work will likely fall most heavily on women, carers, disabled people, and people from ethnic minority groups.
We need our social security system to be a strong lifeline we can all rely on. This vital public service will play an essential role in keeping our society steady through the challenges we will face, not just in the coming months but in in the uncharted waters over the horizon. This pandemic has shown us that we never know when a storm is coming.
Keeping the £20 lifeline will show we’ve learned from the past
It would be wrong to cut social security when we need it the most – a lesson we can learn from past mistakes and avoid making again.
Because of cuts to social security after the last recession, record employment did not protect many families from poverty, with more working families pulled into poverty, and with child poverty rising.
Many people entered the pandemic and the current recession having already seen their living standards squeezed, lacking financial stability and finding weakened social security lifelines to hold them up in the face of job losses.
Even with the emergency uplift, families unable to find work during the crisis will on average receive £1,600 less per year in social security support than they would have done in 2011, and those with children will receive £2,900 less, making hard times even harder.
This Government has shown that it plans to deal with this crisis differently. By implementing this temporary increase to the standard allowance, it has shown compassion and taken the first steps to strengthen our social security system.
Keep families afloat and support the recovery
We welcome plans to invest in infrastructure, create jobs, and support with reskilling, but this will take time. A strong social security system will keep families afloat, support their health, and allow them to seize opportunities to reskill when they arise. It will help reduce the damaging consequences of unemployment and financial hardship, and ensure local economies are not set back even further. As the first step, we need to make the £20 increase permanent and extend it to people on legacy benefits.
To strengthen social security and support our society’s recovery, our message to the Government is simple.
Keep the lifeline. Keep families afloat. Keep doing the right thing.