The staggering Catch 22 forcing workers on Universal Credit to turn one-off payments down: Beckie Hart

The cost-of-living crisis is putting significant pressures on businesses and households right across Yorkshire and the Humber.

Inflation remains high, as do energy bills – leaving firms and their staff hard pressed.

It’s clear that this is affecting many people, especially those on lower incomes.

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Data from the UK food bank charity Trussell Trust shows they supplied almost 1.3 million emergency food parcels between the months of April and September last year.

Beckie Hart has her say.Beckie Hart has her say.
Beckie Hart has her say.

To put that into context and show how the problem is growing in scale, that is a third more compared to the same time period in 2021 and a whopping 50 per cent more compared to pre-pandemic levels.

On a more personal level I see it every week at the Silent Community Kitchen where I volunteer, as more and more people continue turning to us for hot food and drink.

Whilst we are hoping to see inflation fall to single digits later in the year, households and those most in need will continue to feel the pinch for some time.

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And that means that many will continue to face tough choices each and every day when it comes to their own spending budgets.

As many employers are confronted with challenges in their quest to boost our economic growth prospects – such as barriers to business investment - firms across the country know that it is also crucial to support their employees through these difficult times.

Many of them have been trying to make one-off payments – alongside pay rises.

But employees have to pay tax on these payments meaning less money in people’s pockets.

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For those on Universal Credit, it can even adversely impact what they can then qualify for.

That means when an employer offers a one-off payment to support their staff, some employees are forced to turn this payment down – a staggering situation.

That’s why businesses are looking to the Government to support them in alleviating their employees’ financial pressures.

Chancellor Jeremy Hunt has the opportunity to bolster firms in this aim at the Spring Budget, which is taking place in just a couple of weeks time on March 15.

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The CBI is calling on the Government to enable employers to support lower income employees with a tax-free Cost of Living support allowance.

International peers, like Germany, have already implemented similar schemes, supporting businesses and their staff.

This is our chance to make sure these one-off payments – up to £650 - go straight into people’s pockets instead of penalising them for accepting that payment.

Whilst the current economic climate is challenging for businesses and their staff alike, we need to pull in the same direction to ease some of today’s pressures.

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Making it easier for businesses – who are already being held back from going for growth – to support their staff would be an important step in the right direction.

In the Spring Budget which is due next month, the Chancellor has the opportunity to boost businesses and their employees – it’s crucial that we don’t miss this chance.

Beckie Hart is CBI regional director for Yorkshire and The Humber.