Plans to slash Universal Credit will see four million families suffer ‘significant financial decline’*

by danielbarker on 9 October, 2020

Plans to strip families of a £20-a-week rise in Universal Credit to cope through the coronavirus outbreak would see four million households lose 13% of their benefits, analysts warn today.

The Government has so far resisted pressure to abandon moves to scrap the extra payment from April, which would rob claimants of £1,040-a-year. The Institute for Fiscal Studies says axing the additional help would spark a “significant decline” in finances for families hit by the move.

The think tank warns: “The increase is due to end in April 2021, which would see about four million families losing an average of 13% of their benefits overnight.

For some, the proportional fall will be much greater. For example, a childless, non-disabled, single owner-occupier with no other source of income would see a 21% decline in benefits.

“If the Government instead chooses to make this increase permanent, it would add about 10% to the long-run cost of UC, though would undo at most two-thirds of the benefit cuts made since 2015, let alone those made during the coalition.”

The think tank’s Tom Waters said: “Even in its optimistic scenario, the Office for Budget Responsibility thinks that the hit to the labour market from the Covid crisis will increase benefit spending by £17billion this year – and that’s before you account for the £9bn of temporary welfare measures the Government has brought in.
“Together this will take benefit spending to easily its highest level on record.

“Just allowing these temporary giveaways to expire would certainly go some way to cutting this figure, but would mean significant declines in income for the millions of affected families.”
Mark Franks of the Nuffield Foundation said: “As the full extent of Covid-19 became apparent in the spring, the Government made some necessarily rapid changes to working age benefit policy, which have played a vital role in helping to support millions of families through the first six months of the economic crisis.

As the economic fallout continues, the Government now needs to make longer-term decisions about how best to provide sustainable support for those who have lost their livelihoods as a result of the pandemic.

Richard Watts, of the Local Government Association, feared the economic impacts of the pandemic “are likely to be long-lasting and far-reaching”.

He added: “Many households could be economically vulnerable for some time to come and many are now relying on the benefits system to help them make ends meet.

We would urge the Government to keep in place measures that protect those most at risk of financial hardship because of the virus.

*taken from Microsoft News

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