Credit, Collections & Insolvency News
MPs have called on the Chancellor to maintain. for another year ‘at the very least’ the £20 per week increase in Universal Credit (UC) and Working Tax Credit introduced to support families during the coronavirus pandemic.
The report from the Work and Pensions Committee notes that since March the number of people claiming UC has doubled to around six million, while job vacancies remain far below pre-pandemic levels. It warns that removing the payment as planned in April, while the effects of the pandemic are still being felt, would ‘plunge hundreds of thousands of households, including children into poverty’ while dragging those already in poverty ‘down into destitution’.
While the Committee recognised that continuing with the increase would come at a ‘substantial cost’, the Committee argues that this should be seen in the context of the Treasury’s own £280bn figure for total spending on coronavirus support measures this year. The Joseph Rowntree Foundation has estimated that keeping the £20 rise would cost around £6.4bn in the next financial year.
The report also calls on the Government to abandon any plans for one-off payments to replace the weekly rise. The Secretary of State confirmed to the Committee last week that the DWP had been asked to investigate such an option but said it was not ‘one of the Department’s preferred approaches to providing that financial support’.
The report has been published after evidence sessions with frontline support organisations and policy experts and the Secretary of State and Permanent Secretary last week.
Rt Hon Stephen Timms MP, Chair of the Work and Pensions Committee, said “Removing the extra payment in March would represent a failure by Government – failure to recognise the reality of people struggling. Without regular support, hundreds of thousands of families will be swept into poverty or even destitution. Government must end the uncertainty and commit to extending this lifeline.”
“The Chancellor faces difficult decisions about the public finances. He may find it hard at present to make the increase permanent. But the pandemic’s impact on the economy and livelihoods will, sadly, be with us for some time. An extension for a year should be the bare minimum.”
“We must also hope that Rishi Sunak will listen to the groundswell of arguments against one-off payments as an alternative, including from his cabinet colleague at our Committee last week. There is broad agreement that a steady income is necessary to support people.”
StepChange’s Head of Policy Peter Tutton said “We welcome and strongly echo the Select Committee’s findings, which clearly show just how important it is to keep the £20 uplift to Universal Credit. Removing the uplift would mean 74% of StepChange debt clients on Universal Credit would no longer have enough money to meet their essential costs, pushing their average deficit from -£60 to -£147 each month. This would leave more people facing agonising choices between paying their rent and feeding their families; skipping meals and turning to high cost credit just to get by”
“People’s finances have been suffering at the hands of this pandemic for nearly a year – coping strategies are exhausted, budgets stretched to their limit. If the uplift is withdrawn at this stage, those on Universal Credit will be faced with the lowest relative level of unemployment benefit in nearly 20 years, risking deepening inequality, threatening economic recovery and jeopardising levelling-up ambitions. It’s vital the uplift is kept.”
Report findings and recommendations:
Impact of removing the £20 per week increase
One-off payments:
The proposed way forward: