Terina Hine explains why the UC cut will be a disaster for millions of people, including children
The government is pressing ahead with cutting Universal Credit by £20 per week on 6 October. It will be the largest overnight cut to welfare since the establishment of the welfare state, and second only to the 10% slash in unemployment benefit introduced by Ramsay MacDonald’s National Government in 1931.
The £20 uplift to Universal Credit was introduced as a temporary measure in response to the pandemic; as such it can be removed without a Commons vote. The government has confirmed that once the uplift comes to an end some former recipients will be over £1,000 a year worse-off. With the furlough scheme ending only days before on 30 September, millions will be exposed on two fronts, left to face a winter of hardship and misery.
The Resolution Foundation has calculated that the loss of the £20 per week will affect 4.4 million households, containing 3.5 million children. For most affected households this equates to a loss of more than 5% of disposable income; for about one million households the loss will be more like 10%. Over half a million will be pulled into poverty, including 200,000 children.
Working families make up the majority affected, and families with children will be disproportionately impacted. Over half of all single-parent families will see their income fall by more than £1,000 per year.
According to an analysis by the Joseph Rowntree Foundation the cut will ‘leave a single adult who loses their job destitute - the most extreme form of poverty.’ The Foundation also reports that following a Freedom of Information request about the impact of the UC cut, the Department for Work and Pensions deemed the disclosure ‘not to be in the public interest’.
Appeals to extend the uplift - not just from campaigners but from MPs from across all political parties, including six former Work and Pensions Secretaries and a host of prominent Tory MPs - have all fallen on deaf ears. Apparently, the Treasury’s position has become more entrenched over the summer with the desire shore up public finances post-pandemic. The Chancellor is reportedly keen to position himself squarely in the ‘work not welfare’ camp with an eye on future elections.
On Monday, as if to rub salt into the wound, the current Work and Pensions Secretary, Therese Coffey, entered the ‘debate’ by displaying an astounding level of ignorance. In her television interview she told claimants they could simply work an extra two hours a week to make up for the £20 per week cut.
Live on BBC Breakfast Coffey said that she was “entirely happy” with the benefit cut. Going on, she said:
“I’m conscious that £20 a week is about two hours extra work every week – we will be seeing what we can do to help people perhaps secure those extra hours.”
The fact is that for every extra hour worked, many on the minimum wage will receive an increase in pay of only £3.30 (due to the tapering of UC benefits), before any National Insurance and tax or pension deductions are taken into account. So, in fact the real increase for each additional hour worked would be more like £2.24. In order to ‘earn back’ the UC cut, most claimants would need to work an extra nine hours per week. And more when the NI rate rises in April.
Of course, many UC claimants are disabled and unable to work, or are parents who work part-time. Coffey appeared to have forgotten these altogether. Luckily for her, as it would have been quite a feat to explain how to cover additional childcare costs on £2.24/hour.
Frankly it is inconceivable that Coffey does not know that the UC benefit is tapered, and that claimants would have to work more than eight hours each week to make up for the loss of income about to be imposed. It is also impossible to believe that Coffey, who has been Secretary of State for Work and Pensions since 2019, doesn’t know that the minimum wage is £8.91 (for those over 23) and not the £10 she claimed it to be on the breakfast show.
One senior Whitehall official has reported to the media that the government’s own modelling shows the impact of the UC cut will see homelessness and poverty rise, and food-bank usage soar. The Financial Times reported on Monday that the government is ‘braced for the catastrophic impact’ of the cut. There is an expectation amongst many Tory MPs that the government may find itself in sticky water when trying to sell itself as the party of levelling up, once the cut begins to bite. Don’t believe for one minute Coffey was ignorant of all this.
Towing the Chancellor’s line, who repeatedly denies that thousands will be pulled into poverty within weeks of the cut hitting, Coffey and her department are deliberately misleading the public. But as the cuts begin to bite, the evidence will be harder to ignore. So much so that one government minister has warned of a major backlash from the public: a backlash which has the potential to pose a major political problem for the Johnson government.
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