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Social Justice

Universal credit cut could leave young workers with just £51 a month

Vulnerable young people could be pushed into debt and forced to rely on food banks after the universal credit cut on October 6, new analysis showed

The universal credit cut will halve the finances of some of Britain’s most disadvantaged young people, according to new analysis, as poverty experts warn the cut is “not feasible or fair”.

Ministers will end the £20-per-week increase – introduced at the beginning of the pandemic – on October 6, costing low-income households £1,040 per year.

The cut will dramatically narrow the types of housing young people can afford, YMCA warned, and will push vulnerable people into debt and to food banks.

Around 918,000 people aged between 16 and 24 currently claim universal credit, but their payments are lower than for older adults, amounting to £257 per month for single young people.

Like other age groups, their payments are cut if they work. For every £1 they earn their universal credit income shrinks by 63p, but with the increase, they have £87 more per month to live off. 

It’s a significant boost for people “at a critical time in their lives”, said Denise Hatton, chief executive for YMCA England and Wales.

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“By removing the uplift, the choices a young person has when moving out of supported housing narrow dramatically, impacting the type of accommodation they move into.”

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Cutting their payments will also limit vulnerable young people’s access to job opportunities, Hatton added, as well as “how much money – if any – they have left after covering necessities”. Disadvantaged people under 25 could be forced to skip meals when their payments are cut, the organisation warned.

An extra £20 per week makes a “stark difference” to young people on low incomes, who are typically priced out of anything past bare essentials and daily costs, researchers said.

Work and Pensions Secretary Thérèse Coffey said this week the government would shift its attention from supporting people through benefits to helping more people into work or into careers where they can work more hours.

But nearly 40 per cent of 16-to-24-year-olds claiming universal credit are already employed, official figures show.

Young people in work who are still reliant on universal credit – often due to poor pay and precarious working hours – will still face a significant drop in income.

A 19-year-old in one-bedroom private accommodation, working 24 hours per week for minimum wage, will be left with just £51 for the month after covering rent, bills and essentials, analysts said.

The researchers analysed Office for National Statistics figures on essential costs, showing a person on a low income and without children can expect to spend £266 on necessities such as food, health, clothing, toiletries and phone or internet. The figures do not include “everyday items considered for quality of life, from entertainment streaming services to meals out, or a drink after work”, and does not allow for savings.

Analysing data held by the Department for Work and Pensions, YMCA researchers also found that an unemployed young person living in social housing in Blackburn – which is in the most deprived 10 per cent of areas in England, according to government figures – will see their money after rent and bills halved next month, from £170 per calendar month to just £83 after the cut.

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For vulnerable young people in one-bedroom private accommodation – often the best kind of housing for people with complex lives – the financial squeeze could force them out of their homes and into house shares.

“While YMCA appreciates that difficult decisions must be made in order to support the economic recovery of the country after a truly traumatic time, the removal of this lifeline is not a feasible or a fair decision,” Hatton said.

Ministers must scrap plans to cut universal credit “to ensure young people striving for independent living are able to find the best possible fit” when pursuing a career or looking to move into education, she added, without an increased risk of falling into debt.

“The choice should never be one or the other.”

YMCA also called for under-25s living alone to be paid the same amount of universal credit as older adults and for a review of how the limits on benefits for young people compare to the actual cost of living.

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