Universal Credit payments could be decreased in April 2021 - here's why

The increase in payments was only designed to last a year. (Photo: Shutterstock)The increase in payments was only designed to last a year. (Photo: Shutterstock)
The increase in payments was only designed to last a year. (Photo: Shutterstock)

Poverty charities have warned that a cut to Universal Credit payments in April could see millions losing out on a “lifeline” payment.

Charities including the Joseph Rowntree Foundation, Barnado's and the Child Poverty Action Group have implored the government to extend the weekly £20 increase to Universal Credit payments beyond April 2021 or risk plunging millions into poverty.

When and why was an increase introduced?

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The increase, first introduced in April 2020, was intended to help some of the UK’s poorest individuals and families through the coronavirus crisis as many took a hit to their income through loss of work or furlough.

As of April 6, Universal Credit recipients saw their standard allowance in Working Tax Credit and Universal Credit increased by £20 per week on top of planned annual uprating, representing a monthly raise for a single claimant over 25 from £317.82 to £409.89.

The £20 increase was only introduced as a year-long measure, however, and is set to be cut back to previous levels in April 2021.

What will the impact of withdrawing payment be?

Along with others, The Joseph Rowntree Foundation is now calling on the chancellor to make the temporary rise permanent.

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Some 50 food bank providers, children’s charities, benefit and debt advisors, and disability groups have signed a letter imploring the government to extend the £20 increase to avoid plunging the poorest into deeper poverty.

The letter also asks the government to extend the increase to claimants of legacy benefits, who are currently excluded from the raise.

"Falling incomes and rising costs throughout the pandemic have put families under immense financial pressure, but the £20 uplift has been a lifeline that has enabled many of them to keep their heads above water and has stopped us seeing a marked surge in poverty levels," reads one part of the letter.

"However, if the uplift ends in April 2021, this good work risks being undermined."

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Under modelling by the Joseph Rowntree Foundation, an estimated 16 million people will face an overnight drop in income next April, representing a loss of around £1,040 a year.

They say the drop will see 700,000 more people pushed into poverty, including some 300,000 children.

A further 500,000 in poverty will be plunged into “deep poverty”, says the Joseph Rowntree Foundation. “Deep poverty” is defined by those who are over 50% below the poverty line.

"We are therefore urging you to make the uplift permanent and stop families being cut adrift whilst they need help to stay afloat," the letter adds.

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The warning comes just a week after a similar caution from think tank the Resolution Foundation.

The foundation pointed out that a rise in unemployment next April would add to hardship felt by those losing out on the extra £20 per week.

Will the measure be extended?

Last week, Chancellor Rishi Runak outlined his Winter Economy Plan, but no mention of an extension was included.

Currently, there are no signs the increase will be extended beyond April 2021.