Why the Chancellor should extend the £20 Universal Credit uplift

In April 2020, the government increased Universal Credit by £20 per week as a part of a range of Covid-19 support measures. 

However, this uplift will finish at the end of March unless the Chancellor Rishi Sunak agrees to an extension in the budget. This top-up must be made permanent and extended to a range of other benefits to avoid pushing 400,000 extra children into poverty.

My own analysis - Covid-19 and the temporary transformation of the UK social security system -highlights the severity of benefit cuts over the last decade and the Covid-19 bonus was an acknowledgment that means tested benefits were too low for families to survive on during the pandemic. 

Universal Credit has been a vital source of income for many households during the pandemic with latest government statistics showing there are six million claimants, a 98 per cent increase since March 2020. 

Research by Child Poverty Action Group (CPAG) shows that the temporary Covid-19 increase has helped some low-paid working families with full-time jobs to get close to, or marginally above, a minimum acceptable standard of living. 

However, the Covid-19 top-up cannot paper over all of the cracks that have emerged in the social security system over the last decade. The CPAG research demonstrates that the Universal Credit increase does not provide adequate compensation for earnings where people have become unemployed and provides no support for people claiming benefits other than Universal Credit.

A coalition of over sixty organisations has called for the £20 Universal Credit increase to be made permanent, while #KeepTheLifeline has gained significant momentum on social media. The removal of the £20 increase would be hugely damaging. 

The Resolution Foundation forecast that rising unemployment and the removal of the £20 uplift would lead to 1.2 million people falling into relative poverty in 2021-22, including 400,000 children. The cut to Universal Credit would disproportionately affect disabled claimants and ethnic minority families.

It is clear that the economic impact of the pandemic is far from over. The Chancellor has stated that he ‘is preparing a Budget that provides support for people’ as coronavirus restrictions are lifted, including £5 billion support for business. 

However, financial hardship will be a reality for many families with the furlough scheme set to finish in April, unemployment predicted to increase to 7.5 per cent in the second quarter of the year and at least half a million private renters in arrears. A number of schemes are available to help people who are experiencing debt, such as the Debt Respite Scheme and mortgage payment holidays but these are time limited. If Universal Credit payments are to revert to pre-pandemic levels, it could not come at a worse time.

There will inevitably be a significant increase in demand for services for vulnerable children and families. Welfare rights and debts services will need to provide advice to families experiencing financial hardship. The mental and emotional impacts of financial vulnerability will lead to increased demand on CAMHS, and the expected spike in homelessness and housing-related issues will require the intervention of housing specialists.

The maintenance of the £20 uplift would not on its own make the social security system fit for purpose, but it would be a step in the right direction. It should be accompanied by a similar increase for other benefits which are typically claimed by disabled people and carers, and the removal of the two-child limit for benefits and the benefit cap. 

This Budget provides an opportunity for the Chancellor to reset the social security system and to more appropriately respond to the ongoing challenges of Covid-19.

Richard Machin is a senior lecturer in social work and health at Nottingham Trent University.