Millions facing ‘daily battle’ as government cuts universal credit

The universal credit cut comes as a “devastating” blow to millions of people on low incomes, campaigners have said, as ministers go ahead with the widely condemned rollback from Wednesday October 6.

When the government increased payments by up to £20-per-week at the start of the pandemic, it was framed as a temporary support measure to support households through the Covid-19 crisis. But the increase barely compensated for a decade of social security freezes and cuts, experts said, and the pandemic is still having a significant effect on household budgets.

The government today cuts payments back to pre-Covid levels, taking £1,040 from the annual incomes of claimants. The nearly six million people reliant on universal credit now face what devolved government leaders have called a “cost of living crisis” as fuel and food bills soar, jobs are put at risk by the end of furlough and wages fail to keep up with daily expenses.

“This is a devastating blow which will push thousands even further into debt,” said Richard Lane, director of external affairs at StepChange. “With £20 a week withdrawn from their budget, the monthly deficit of the average StepChange client relying on universal credit will triple, from -£40 to -£126.

“This means more people will be faced with agonising choices between paying their rent or feeding their families, skipping meals, or turning to high-cost credit just to get by.”

The government’s £500m household support fund, announced last week and to be distributed by local authorities on a case by case basis, will help people deal with “one-off emergencies”, Lane added. “But when faced with today’s cut, along with the end of furlough, rocketing energy prices and rising inflation, millions will face a daily battle just to get by.”

Ministers should monitor the cut’s impact in the coming weeks and reverse it “before the damage becomes too deep”, Lane said.

Today’s payment reduction is the biggest overnight cut to social security since the Second World War, according to the Joseph Rowntree Foundation. The organisation’s research showed another half a million people could be pushed into poverty by the cut, including 200,000 children.

The £80-per-month less will “leave millions of families – many of them in work – without enough to live on”, said Alison Garnham, chief executive of Child Poverty Action Group. The government has insisted it is focusing on helping people into jobs instead of relying on the welfare system, but around 40 per cent of people claiming universal credit are already employed.

“Cutting the incomes of the lowest earners won’t support jobs, it will increase child poverty, and leaves the future looking very bleak for struggling households,” Garnham added.

The National Landlords Association has also called for the cut to be reversed, warning of the impact on both tenants and property owners.

“Today’s cut is a short-sighted move that will only serve to worsen this ongoing rent debt crisis,” said Meera Chindooroy, deputy policy director for the organisation.

“During the pandemic we have found that many renters have built high levels of arrears, which they will struggle to pay off in future.

“It is our view that not only must the Government end the five-week wait for the first payment of universal credit, it should also ensure they can choose to have the housing element of their payments sent directly to their landlord.

“Adopting this new approach will go a long way towards the creation of a fairer, more inclusive private rented sector which works in the interests of both landlords and tenants.”

Food bank workers have warned they expect a surge in demand now families’ monthly payments have been cut, while advocacy groups have reported a drastic increase in the number of people looking for help.

Citizens Advice recently recorded a 9,000 per cent surge in the number of people looking online for help with their fuel bills this winter.

“Cutting universal credit as we head into a very tough winter is a recipe for disaster,” said Dame Clare Moriarty, chief executive of the charity.

“With household budgets already being squeezed from all sides, families on the lowest incomes simply cannot afford to lose £20 a week. 

“If the government is serious about ‘levelling up’ it must change course. Otherwise our frontline advisers could see many more facing desperate choices between heating and eating in the months ahead.”