Why Universal Credit lifeline for poor must be maintained in Budget – Alistair Cromwell

With each benefits application and food bank referral, our staff and volunteers see the devastation of this crisis. They now face the difficult task of warning families about an impending £20-a-week cut to their income.

The Chancellor has a crucial opportunity to intervene at the upcoming Budget. Maintaining the Universal Credit uplift for at least a year is the right thing to do – both for people who have lost their livelihoods in this pandemic and for our fragile economy.

The Government deserves credit for stepping in as the first lockdown took hold. The furlough scheme prevented an even bigger wave of job losses, but many still lost their livelihoods.

When redundancies surged, the Chancellor announced a cash boost to Universal Credit. This parachute eased the shock as incomes plummeted and millions entered the welfare system.

In Yorkshire and the Humber, latest data shows that more than a quarter of a million people have applied for Universal Credit since last March.

The Government’s intervention may have been a response to an unfolding crisis, but it also lifted many who were already struggling out of severe financial difficulty.

That lifeline is set to end at the start of April, but the economy has not bounced back. Forecasts suggest we’re yet to see unemployment at its peak. Despite the hope offered by vaccines, shuttered shopfronts and a stagnant labour market point to a tough road ahead.

There are currently five claimants expected to look for work for every single vacancy. Against this challenging economic backdrop, it’s right that the Government has invested in job creation schemes.

But it must also seize this opportunity for a sea change in how we support people who are out of work. Cutting Universal Credit now would put benefits at their lowest level since the early 90s, all in the middle of a recession.

The difference a £20-a-week increase has made to families who are struggling is undeniable. One parent told us that extra money allowed them to keep the radiators on while they home-schooled their children.

Another said it meant they were able to put a decent meal on the table instead of visiting a food bank. Dozens of our advisers testify that it’s stopped people making impossible choices about which bill to fall behind on each month.

Most striking has been the impact for those we’ve helped who were already on a financial knife edge when Covid hit. People who looked at their bank balance at the end of the week and simply didn’t have enough to make ends meet.

If this intervention comes to an end in April as planned, three-quarters of the people Citizens Advice helps with debt who receive Universal Credit or Working Tax Credit wouldn’t be able to cover their living costs.

With energy and utility bills on the rise, people are facing a double whammy of spiralling outgoings and limited job opportunities.

In our experience, people 
want to work, but they’re facing a brick wall of ongoing restrictions and meagre opportunities.

Zero-hours contracts may have surged, but they don’t always provide the stability people need to budget.

Latest data shows almost 40 per cent of people on Universal Credit are in employment. A cut to benefits would hurt working families too.

It would also hurt the local economy. In Yorkshire, the value of the uplift is around half a billion pounds. Turning off that tap in April would mean lower spending at local businesses. It risks an increased likelihood of people falling into hardship, putting more pressure on stretched local authorities.

The Government is right to consider its options, but after the devastation of Covid-19, people need stability to pick up the pieces.

A one-off benefits payment or an extension of just a few months simply won’t rise to the challenge. Worse, it risks kicking the can down the road only to leave millions facing the uncertainty of the same cliff-edge later this year.

As the Chancellor tallies up spending for the coming year, we’d urge Rishi Sunak to put maintaining the Universal Credit increase at the front and centre of his plans.

Alistair Cromwell is acting chief executive of Citizens Advice.

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