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The Universal Credit cut

In response to the economic hardship brought on by the COVID-19 pandemic last year, the government announced an uplift for those on Universal Credit (UC) by £20 per week. 19 months on from this announcement, the uplift has been taken away despite the financial struggles remaining. Those on UC are expecting a difficult winter period where tough decisions may have to be made just to survive. Unlike Therese Coffey, those experiencing the benefit cut cannot expect to have ‘the time of their lives’ as a result.



WHAT IS UNIVERSAL CREDIT?


Universal Credit was introduced in 2013 to support those on low incomes over 18, regardless of your employment status. The minimum standard allowance of UC is currently £344 per month. The idea was to simplify the benefits system by amalgamating 6 previous benefits into 1 single monthly payment, not weekly as previously. Currently, 5.8 million people in the UK, excluding Northern Ireland, are claiming the benefit with 40% in employment. Throughout its existence it has come under criticism for its payment waiting times, application process, means testing and influence on other benefits.


WHAT’S HAPPENED?

On the 6th of October this year, the uplift officially ended, signalling the single largest cut of a benefit since the Second World War. Calculations by the Resolution Foundation found that those under 25 have seen a 25% cut to £59 per week, whilst those 25 and over have had their allowance fall by 15% to £117 per week. Overall, the cut could see 5.1 million adults and 3.5 million children lose £1,000 per year, with many problems expected to arise as a result.



However, it is the timing of the announcement that has attracted the most attention. Claimants’ benefits have been cut at a time of a rising cost of living. Inflation is rumoured to rise to 4% over the next few months with wages not rising accordingly. Energy, fuel, food and rent prices are set to skyrocket as we arrive into winter. Consequently, mental and physical health problems, like depression, stress and malnutrition are expected to increase, with financial issues like debt and rent arrears also expected to follow suit. Figures suggest a worrying picture emerging for private renters as 100,000 have become at risk of homelessness due to the cut and imminent end of the furlough scheme. The pandemic saw the proportion of private renters relying on benefits increase to a third at the start, with 2 million of them claiming UC by May 2020. Chief Executive of Crisis, Jon Sparkes, was recently quoted saying: “For many struggling renter this cut could be the final blow that forces them from their homes”. Whilst the government believes it is time to end the uplift and lift those from poverty by other means, the Child Poverty Action Group fears a rise in child poverty by a third because of this.


60% of the public are in favour of the uplift remaining, however the government believes the best way to lift those from poverty is through employment. Although, the facts beg to differ. 40% of UC claimants are in work as in-work poverty increases. The government is trying to encourage companies to increase their wages to offset the cut but external income can greatly affect your UC claim. This can mean that despite in employment, you will be financially worse-off than when claiming UC, forcing more into poverty.


This is, overall, a very disappointing decision by the government that does nothing to help or encourage those out of poverty and makes the dark winter months ahead much harder.


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