Why DWP urgently needs to make universal credit enough so people can afford the essentials

Universal credit falls short of the money people need to afford the basics they need to survive.

Millions of people in the UK are going without food, falling behind on bills and living in cold and damp homes as benefits fail to cover the cost of living.

New research from the Joseph Rowntree Foundation has found that nearly one million people are only £10 a week away from falling into poverty. That includes 200,000 children.

• Nearly one million people only £10 a week away from poverty, study finds
• Universal credit claimants lose more than £1bn a year to ‘automatic DWP deductions’
• Next government must increase universal credit so people have enough money to survive

Around seven million households across the country had gone without essentials like showers, clothing or toiletries in the last six months, or had gone hungry or skipped meals in the last 30 days.

The Joseph Rowntree Foundation, the Trussell Trust and the Big Issue, backed by more than 100 organisations, are calling for an ‘essentials guarantee’ to be implemented into universal credit so people can at least afford the basics they need to live.

It is one of the asks in the Big Issue’s Blueprint for Change, which sets out how the next government can end poverty for good. So how would an essentials guarantee work? How much should universal credit increase? And how can you show your support? We explain all you need to know.

How much does universal credit need to increase so people can afford the essentials?

Universal credit must be at least £120 a week for people to afford the essentials, according to estimations by the Joseph Rowntree Foundation.

That means that the standard allowance for universal credit for people aged 25 and over falls short by around £30 every week – or £120 every month.

For people aged 25 and under, the shortfall is even higher, at around £48 every week.

Couples aged 25 and over are left £57 out of pocket each week between them, and younger couples are £87 short every week.

How much money do people spend on essentials?

Single adults need £120 a week to afford their basic essentials, not including housing costs.

Let’s break that down. The Joseph Rowntree Foundation estimates that around £39 goes on food and alcoholic drinks for the average adult. People spend roughly £27 each week on electricity and gas. Water comes in at just £6 and it’s the same cost for clothes and shoes. There’s £9 on communications – like phone bills, internet and postage. Travel’s about £16, and those extra costs like toiletries, cleaning materials, haircuts and bank charges are around £15. All that together is £120.

Couples save a bit of money when living together – so they’ll spend around £100 each on the above.

Universal credit just isn’t stretching to cover this. And it’s important to stress that these are essentials: things we all need to live and work in society. It doesn’t include luxuries which we should all be entitled too – the little bit of cash to spend on going for a drink with friends, for a holiday or day trip with your kids. Many would argue that these too are essentials, because they are vital to our mental health.

But at the moment, the bleak reality is that universal credit claimants cannot even afford food or heating. It’s why more people than ever are being forced to turn to food banks for the first time, with food banks in the Trussell Trust’s network handing out more than three million food parcels in the year up to March.

More than half (55%) people on universal credit ran out of food and could not afford any more in January this year, the Trussell Trust found.

How would an essentials guarantee work?

The essentials guarantee would make it policy that universal credit must protect people from going without the essentials. There would be a legal minimum embedded into the universal credit system.

There would be an independent process to regularly recommend the essentials guarantee level, based on the cost of essentials (such as food, utilities and vital household items) and adjusted to inflation.

The standard allowance would need to at least meet this amount and any deductions to universal credit, such as debt repayments to the government, would not be allowed to reduce support below that level.

New analysis by the New Economics Foundation has found that half of people on universal credit are having money deducted from their payments each month, losing an average of £63.

How much would an essentials guarantee cost?

The essentials guarantee is estimated to cost an additional £19billion a year in 2024/2025, according to the Joseph Rowntree Foundation. That’s not insignificant, but it would also mean huge savings for public services.

Poverty leads to poorer physical and mental health, increased demand on the NHS and social care services, and higher crime rates.

The health impacts of poverty also mean that people are less likely to be able to contribute in a substantial way to the workforce and economy. Children living in poverty are less likely to thrive in education, meaning their chances of thriving in the workforce in the future are less likely.

Child poverty currently costs the taxpayer a staggering £39billion annually.

The Joseph Rowntree Foundation has suggested that the essentials guarantee could be introduced gradually, such as being embedded at a lower level to begin with. It also means that people have a bit more money to spend on essentials, benefitting high streets and local economies.

How many people on universal credit would benefit from an essentials guarantee?

Around 8.8 million low-income families would benefit from an essentials guarantee. That includes 3.9 million families with children.

Over half of all working-age families in the UK with a disabled family member would benefit.

Then you’ve got the wider benefits for the population as a whole – NHS staff would be under less pressure, food banks would get some relief, local councils would no longer have to help as many people get out of financial crisis, and we would see safer streets because of reduced crime rates… In the long term, it’s an investment for the taxpayer.

Who supports the essentials guarantee?

A petition from the Trussell Trust reached more than 150,000 signatures from people showing support for the essentials guarantee.

According to the Joseph Rowntree Foundation, 72% of the public support the essentials guarantee and only 8% oppose it. Around 82% of people who voted Labour in 2019 support it, 83% of Liberal Democrat voters, and 62% of Conservative voters support the policy.

The work and pensions committee, a cross-party group of MPs, recommended that the government introduce a new benchmark for benefits levels which takes into account living costs, such as that set out in the essentials guarantee.

It also recommended an “uprating guarantee” which would give claimants the assurance that working-age benefits and local housing allowance will be increased each year.

Stephen Timms, the chair of the work and pensions committee, said: “We have heard plenty of evidence that benefits are currently at a level that leaves many unable to afford daily essentials or meet the unavoidable extra costs associated with having a health impairment or disability.

“The government has previously said that it is not possible to come up with an objective way of deciding what benefits should be. Our recommendations are a response to that challenge, and the ball is now back in the government’s court.”

Now, it will be up to the next government to make the change and so far no party has committed to an essentials guarantee.

More than 100 organisations – including the Big Issue, New Economics Foundation, Centrepoint, StepChange and more – have backed the calls for an essentials guarantee.

You can sign the Big Issue’s petition calling for the next government to commit to ending poverty, such as through the implementation of an essentials guarantee, below. You might also want to email your MP to show your support.

Big Issue is demanding an end to extreme poverty. Will you ask your MP to join us?