Don’t Cut Universal Credit

Cllr Alan Hall has joined trade unionists, campaigners and think tanks in applying pressure for the Chancellor of the Exchequer, Rishi Sunak to overturn the decision to cut £20 per week from Universal Credit claimants many are working on low pay. This comes as the Resolution Foundation has revealed that four in ten households on Universal Credit face 13 per cent rise in energy bills in same month as their income is cut by £20 a week.

Lewisham CAB warn of ‘perfect storm’

In July 2021, there were 39,552 people claiming Universal Credit in the London Borough of Lewisham, of these 15,769 are working.

Jonny Marshall, Senior Economist at the Resolution Foundation, said: “Low income families are facing a cost of living crunch on several fronts this autumn with energy bills rising alongside wider price increases, while Universal Credit is also due to be cut by £20 a week.”

“Around 15 million households are set to face higher prices next week when the energy price cap is raised. This will be particularly acute for low income families on Universal Credit, who are four times as likely as the rest of the population to be on pre-payment meters, and therefore face even bigger increases to their bills.”

The Foundation notes that 4.4 million households on Universal Credit are set to see their energy bills rise significantly in October, the same month that will see them typically lose over 5 per cent of their disposable income as the £20 a week uplift to UC comes to an end, and as the onset of winter boosts energy consumption.

The energy price cap is set to rise by £139 a year (12 per cent) to £1,277 (for a typical gas and electricity customer) a year from 1 October, but a larger increase of £153 (13 per cent) a year will affect pre-payment meter customers. Pre-payment meter customers are also overwhelmingly on variable rather than fixed rate tariffs and so will be more swiftly affected by these price rises.

Universal Credit is available to people who are in work and on a low income, as well as to those who are out of work. The numbers in work make up a significant proportion of the total claimants hovering around the 40% mark.

The number of people on Universal Credit in London and surrounding regions has doubled since the beginning of the coronavirus pandemic according to Government statistics up to January 2021.

People on Universal Credit in employment, Great Britain, December 2015 to December 2020 source HM Government

In November 2020, the Government estimates that one in five claimants receive a reduction due to the bedroom tax. The average (mean) monthly reduction amount was £70 and the median reduction amount was £60. This will be additional to the £20 per week cut.

Lewisham Citizens Advice Bureau have released details of some of the cases seen by frontline advisers, these include:

Aliyah, who is struggling to find a job because of the pandemic, and paying back deductions for an advanced payment and also outstanding council tax debt. Their flat is in poor condition and many of their household appliances are broken. Aliyah already struggles with poor mental health and is worried that removing the £20 increase will make this worse and lead to her having to rely on foodbanks to eat.

They are also seeing an increase in clients who have had to take time off work after catching coronavirus, which exacerbated their existing health conditions. They fear they will fall into housing debt without the £20 a week increase. Along with single parents who are only just able to pay for after school childcare costs while they work thanks to the £20 increase. This has helped them stay in their job and pay essential bills.

Gary Jones, Chief Officer of Citizens Advice Lewisham, said:

“Every day, our staff and volunteers see the difference the increase to Universal Credit has made to families. As an organisation we have supported over 24,000 clients in the last year and for many of them, Universal Credits has been a key factor in helping them keep their heads above water. Without that extra money, we fear we’d see more people coming to us in debt, unable to pay their bills or turning to food banks because they can’t afford the essentials. As we look to rebuild our borough through the ongoing impact of COVID , the government must invest in the benefits system and keep this vital lifeline.”

The full text of the letter by Cllr Alan Hall is here:

Rishi Sunak MP

Chancellor of the Exchequer

HM Treasury

Dear Chancellor,

Please don’t turn your back on six million people. There is an economic argument, a humanitarian argument and fairness argument that asks for an urgent rethink of your decision to cut Universal Credit from the 5th October.

Your callous cut will push countless families and working people into even deeper debt and poverty in what is the biggest overnight benefit since World War II.

Never has a Chancellor’s duty to protect the most vulnerable been more pertinent. Charities are warning that one million households will lose 10 per cent of their income overnight when you snatch back the £20 a week – £1,040 a year – with one in four children made poorer as a result.

With 40% of Universal Credit claimants already in jobs, perhaps as chancellor you should be focused on halting the march of poverty pay, not taking £20 from those most in need.

Levelling up does not start with ripping up our already threadbare safety net. Even the Universal Credit-General accepts that the benefit has for years been slipping further and further below what people earn in jobs, because of freezes.

Please listen to your own Tory MPs, including Universal Credit’s architect Iain Duncan-Smith, footballer, anti-poverty campaigner Marcus Rashford, and the many charities, landlords and debt organisations who have all condemned the cut.

But most importantly listen to Universal Credit claimants when they say this money isn’t paying for luxuries like swimming pools and tennis courts. For them it’s literally meant the difference between heating and eating.

Without this vital income boost vulnerable children will suffer. This will be on your watch and your legacy.

Yours sincerely,

Cllr Alan Hall – Bellingham

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