Luca Difato,
Operational Team Support Administrator & Communications Assistant
08 October 2021.
3 Minute Read
An uplift to Universal Credit payments was introduced during the early months of the pandemic back in April 2020, as a way to provide extra relief to all recipients. Fast-forward 18 months and there are twice as many people receiving Universal Credit than the previous year, with the number of claimants reaching 6 million at the start of 2021 and now the uplift has ended. While the uplift was always intended to be temporary, the removal of it comes at an increasingly difficult time for those on low incomes as the start of a challenging winter for many people looms with the familiar hallmarks of the 1978 Winter of Discontent as energy prices rise and army tankers are being used to deliver petrol amid chaos on the forecourts.
With the £20-a-week increase ending on the 6th October, claimants of Universal Credit had been notified in September that it would be the last time receiving the temporary increase of £86.67 a month. This means the change will have officially come into effect from the date they usually receive their monthly payment. The uplift was designed to help people through the economic malaise of the pandemic and protected some 840,000 people from poverty in the second quarter of 2021 according to the Legatum Institute. Now, the uplift ends at a time when it is needed more than ever with inflation rising above 4% and an impending levy to national insurance contributions which is being exacerbated by the rising gas and energy prices, as millions of households will see a £139 increase to their energy bills.
So who will be affected and by how much?
The end of the uplift will affect all claimants, with the average loss of entitlements being 12% for claimants, matching the 12% rise in energy prices we are seeing currently. Despite this, according to the Institute of Fiscal Studies a quarter of Universal Credit claimants could see a 20% loss as those under-25 with no children who currently claim £95-per-week including the uplift will be hit especially hard. This currently represents 1.2 million people. Furthermore, the standard allowance for a single person under-25 will fall 25% to just £59-a-week, compared to a 15% fall from £137 to £117 for a couple where one of them is under-25, as the Resolution Foundation calculates. Individual or joint allowances are dependent on ages, see below for a table of allowances.
The proportion of income that claimants will lose will vary depending on their circumstances, but previous Citizens Advice analysis works out £20 a week to be worth six days of energy costs or three days of food costs for a low-income family.
Monthly standard allowances will drop:
You can find this information and find out more about the cuts from our national site : https://www.citizensadvice.org.uk/about-us/about-us1/media/press-releases/universal-credit-cut-everything-you-need-to-know/.
This issue is about much more than £20 a week. A third of people on Universal Credit will be pushed into debt now the uplift is withdrawn.
The Resolution Foundation has said that the timing of the cut coinciding with the aforementioned inflation, soaring energy costs and health and social care tax will mean that low income families will be over £1,000 worse off annually, even after the minimum wage increase is accounted for.
The Standard Life Foundation states 6 million people will struggle to put food on the table with 764,000 being pushed into poverty. Further implications include a spiral of mental health issues as Mental Health UK reported that visits to their health and money advice services have already doubled in 2020/21. The Business Secretary Kwasi Kwarteng has already warned of a “ very difficult winter ahead” and it is the low income bracket that will be the most vulnerable to this.
What support is available?
As the £6bn-a-year cut in Universal Credit is made official, the Government has announced the availability of £500m in new grants to be made available. The Household Support Fund will see local councils distributing the money to help pay for food and bills to those who need it. This represents an admittance that the current social security safety net after the £20 a week cut is simply insufficient to those on low incomes.
Despite this, it does not go far enough to support those who are seeing benefits decrease and their households bills increase as 1.7m households will be affected by their energy suppliers going bust. The cost of living is steadily rising and this new measure resembles more of a temporary distraction than a long term solution. People are understandably going to be financially worse off at the end of a pandemic than they were at the start, and the level of support available should reflect that.
If you are worried about your finances then please contact your Local Citizens Advice. Citizens Advice Reigate and Banstead details can be found at the bottom. Examples of how we can help are below.
Call our free National Adviceline at 0808 278 7945, visit our website at www.carbs.org.uk or email us at info@carbs.org.uk for free, independent advice.