Universal credit - the impact of cutting the £20-a-week

26th Aug 2021

Our latest analysis shows the number and proportion of families who will be impacted by the £20-a-week cut to Universal Credit and Working Tax Credit in each UK parliamentary constituency.

The planned cut to Universal Credit and Working Tax Credit in October:

  • 140 constituencies would see more than one in four of all families (with or without children) affected, including 36 Conservative seats.
  • According to this analysis, on average 21% of all working-age families (with or without children) in Great Britain will experience a £1,040-a-year cut to their incomes on 6 October.
  • Over 400 constituencies are set to see over one in three working-age families with children hit by the cut.

In March 2020, as we were faced with the economic fallout from the pandemic, the Government recognised that our social security rates were too low to protect families when they need it. The Government did the right thing and increased Universal Credit and Working Tax Credit by £20 a week.

However, this £20 a week is scheduled to be cut, coming into effect for families on Universal Credit from 6 October. This cut will impose the biggest overnight cut to the basic rate of social security since the foundation of the modern welfare state.

Our analysis has shown that around 5.5 million low-income families will lose £1,040 from their annual income, creating serious financial hardship and leave 500,000 people to be swept into poverty - including 200,000 children. Families with children will be disproportionately impacted and worryingly, 6 in 10 of all single-parent families in the UK will be impacted. Our latest modelling results showing the impact of the £20 cut on different families can be downloaded below.

The Government is rightly saying that it wants to support people back into work as we emerge from the crisis. But working families make up around 60% of families who will be affected.

Our visual and digestible briefing investigating the adequacy of social security, using a variety of measures, showed that social security adequacy has reduced significantly in recent years and that the £20 increase was a vital strengthening of support.

Politicians of all parties have warned against this cut and called for the investment to be made permanent, including Labour and SNP leadership, all six previous Secretaries of State for Work and Pensions since 2010, the Work and Pensions Committee, the Lords Economic Affairs Committee, the Conservative Northern Research Group and the Conservative One Nation Caucus.