New research by the Fabian Society has found that over 700,000 people in working or disabled households are to be pulled into poverty by universal credit cuts. 

The government has indicated that they will decide in early March whether to keep or scrap the temporary 12-month Covid payment giving claimants just a month to plan for what could be a £1,050 a year cut in benefits.

The report estimates that if the planned cuts to universal credit and tax credits go ahead it will put 760,000 people below the poverty line over the medium term. Of these, 490,000 (64%) will be in working households where at least one adult works, many with children.

The report shows how the cut to universal credit will reduce the living standards of households in many different circumstances indicating that households with a disabled adult will be hit by 57 per cent of the cuts (£3.7bn per year). Families with children will be hit by half the cuts (£3.2bn per year) whilst. households, where someone is a carer, will be hit by 12 per cent (£700m per year). Only 13% of the savings will come from non-working, non-disabled households.

In April the government is planning to implement a huge cut in social security by reversing temporary benefit policies introduced at the start of the Covid-19 pandemic. In the coming years the cut will reduce family incomes by £6.4bn annually and drag 760,000 people into poverty.

The key improvement made last year was a rise in the main adult allowance for universal credit and working tax credit by around £20 per week. After a decade of sustained cuts to social security this was a very welcome measure and has sustained millions of households with zero or low earnings through the pandemic.

Ministers are planning for it to disappear just as the government’s main unemployment-prevention measures also come to an end in April. In a previous report, the Fabian Society examined the impacts of the planned cuts in the context of a possible surge in unemployment in 2021.

The analysis shows that the main victims of the cuts will be working families and disabled people, 87 per cent of the cuts (£5.5bn per year) will hit working or disabled households. 95 per cent of people pulled into poverty by the cuts (720,000 people) will live in working or disabled households.

Many people who are working or disabled will see a cut in their incomes of around £1,000 per year, even though in most cases there is no expectation that they should be seeking to work or to increase their earnings.

Andrew Harrop, General Secretary of the Fabian Society, said “If ministers cut universal credit this April, they will overwhelmingly punish working families and disabled people. People in these groups have shown huge resilience during the pandemic and have done nothing to deserve this.”

“The chancellor’s planned cut will strip £1,000 per year from 6 million families and plunge three quarters of a million people into poverty. Some politicians like to pretend that social security is just for the workshy. But the reality is that millions of working households need benefits and tax credits to make ends meet, as do disabled people who are out of work through no fault of their own.”

“If ministers are considering a few months’ temporary extension to the universal credit uplift, that just isn’t good enough. The 2020 benefit increase must be placed on a permanent footing.”