Universal Credit reduction will have ‘devastating consequences’
Debt charity StepChange says the cut will have “devastating consequences” for its clients. Before today’s cut, among StepChange clients who rely on Universal Credit, the majority (59%) had more income than outgoings each month. Now, just 28% will have enough to make ends meet.
For those already experiencing a monthly budget deficit, the situation is even bleaker, with the average shortfall among clients on Universal Credit tripling from £40 to £126 a month.
Richard Lane, StepChange director of external affairs, said: “This is a devastating blow which will push thousands even further into debt. With £20 a week withdrawn from their budget, the monthly deficit of the average StepChange client relying on Universal Credit will triple, from -£40 to -£126. This means more people will be faced with agonising choices between paying their rent or feeding their families, skipping meals, or turning to high-cost credit just to get by.”
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. Ministers say the uplift was only ever meant to be a temporary measure to help people through the Covid-19 pandemic.
The government has introduced the £500m Household Support Fund to help vulnerable households this winter. The cash is distributed on a discretionary basis by local authorities. However, with the end of furlough, soaring energy prices and rising inflation, millions will face a daily battle just to get by.
Kevin Brown, savings specialist at Scottish Friendly, said: “The government’s decision to retract the extra £20-per-week in universal credit piles even more misery on low-income households at a time when they are already struggling to make ends meet.
“Sadly, those in Westminster with the ability to soften the blow seem unwilling to do so at this moment. It’s reminiscent of the naivety shown by the Labour government in the late 1970s during the Winter of Discontent when they crudely misjudged the severity of the crisis.
“Families not having enough left over to put towards building up a savings buffer is bad enough, but we’re now talking about some not even having enough to afford basic essentials. It’s time for the government and policymakers to wake up to the severity of the situation and take action.”