Social Justice

Universal credit cut will 'suck billions out of local economies' from October

Researchers warned the universal credit cut, expected in a little over a month, could mean poverty for one in five families where at least one person is aged between 16 and 64

More than a fifth of Britain’s working-age families will soon be forced to make ends meet on £1,040 less per year despite already being on low incomes, according to new analysis, as experts urge Boris Johnson “it’s not too late” to reverse the universal credit cut.

Deprived people in Yorkshire and the Humber, the West Midlands and the North East and North West of England will bear the brunt of the cut when ministers roll back the £20-per-week increase – introduced at the start of the pandemic to support people relying on the benefit – in September, Joseph Rowntree Foundation (JRF) analysts warned.

“Plunging low-income families into deeper poverty and debt as well as sucking billions of pounds out of local economies is no way to level up,” said said Katie Schmuecker, deputy director of policy and partnerships for the JRF, who called the cut “the biggest overnight cut to the basic rate of social security since the Second World War.”

The analysis “lays bare the deep and far-reaching impact” the cut will have on the more than 5.5 million people claiming universal credit, she added, warning it will “cut living standards”.

Many people receiving the benefit have already received letters telling them the date of their last payment at the current level, posting pictures to social media with concerns about how they will pay their bills.

https://twitter.com/miniabbysciuto/status/1427608837608067073?s=20

Jonathan Reynolds, Labour’s shadow work and pensions secretary, said the cut will be “a hammer blow to millions of families, hitting the lowest paid hardest and hurting our economic recovery.”

“Time is running out for the Conservatives to see sense, back struggling families and cancel their cut to universal credit,” Reynolds added. “Labour would maintain the uplift until we can replace universal credit with a fairer social security system.”

Researchers used the latest government figures across universal credit and child and working tax credits to assess the impact on households where at least one person is aged between 16 and 64.

“The temporary uplift to universal credit was designed to help claimants through the economic shock and financial disruption of the toughest stages of the pandemic, and it has done so,” a government spokesperson said in response to the report.

The decrease will hit families with children even harder, according to the study.

In 413 of Britain’s 632 parliamentary constituencies, more than one in three of such families will lose out on income as a result of the cut.

More than 191 of those constituencies are held by the Conservatives. Families in Peterborough, where 64 per cent of families with children receive the benefit, are most at risk. 

But the reduction in payments will have the greatest impact across Labour constituencies, including in Bradford West, where 82 per cent of families with children claim universal credit.

“MPs from across the political spectrum are already expressing their deep concerns about this planned cut,” Schmuecker added. As well as opposition from Labour politicians, the prime minister is facing a significant revolt from around 60 Tory MPs who want the government to scrap the universal credit cut. 

“It’s not too late for the prime minister and chancellor to listen to the huge opposition to this damaging cut and change course,” she added.

The government spokesperson added: “Universal credit will continue to provide a vital safety net and with record vacancies available, alongside the successful vaccination rollout, it’s right that we now focus on our plan for jobs, helping claimants to increase their earnings by boosting their skills and getting into work, progressing in work or increasing their hours.”

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