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1.5 million workers could be forced into hardship by Universal Credit cut

Emma Lunn
Written By:
Emma Lunn

Citizens Advice has warned that the combined effect of the Universal Credit cut and rising energy prices could see a surge in households seeking support.

The charity said that 1.5 million working people on Universal Credit could be pushed into poverty over the coming months.

The government increased Universal Credit payments by £20 each week at the start of the pandemic. This uplift was due to end in April 2021, but was extended by six months in the Budget in March despite widespread opposition. It’s due to finish at the end of September – next week.

The cut to benefit payments comes at a time when rising energy prices and higher living costs are putting pressure on household budgets.

Citizens Advice’s latest research shows two thirds (67%) of working claimants say they’ll face hardship if the cut goes ahead. This includes struggling to pay their bills, getting into debt, or being forced to sell belongings to make up for the shortfall in their income.

Around one in four working claimants – equivalent to 600,000 people – are worried they might not be able to afford food or other basic necessities such as toiletries.

Citizens Advice says shop workers, nursery assistants and security guards are among those seeking its help because they’re worried about how they’ll manage over the winter.

About 2.3 million Universal Credit claimants are already in work. A further 1.7 million are unable to work due to health or caring responsibilities. Frontline staff at Citizens Advice say many people they’re supporting would struggle to make up the lost money by finding work or increasing their hours.

The taper rate – a reduction to your Universal Credit based on your earnings – means someone paying National Insurance and tax could have to work nine hours at the National Living Wage to make up for the cut.

Dame Clare Moriarty, chief executive of Citizens Advice, said: “With energy bills set to rise and family finances already stretched to the limit, this cut is coming at the worst possible time.

“Shop workers, nursery assistants and security guards are just some of the people on Universal Credit seeking our help because they’re already struggling to make ends meet. The government has shown in this pandemic that it’s willing to support people through hard times. With a cost of living crisis underway, it must reverse the disastrous decision to cut this lifeline.”