The £20 UC cut: the final straw?

At the beginning of August, the headline in the Guardian stated “Johnson faces rebellion over ‘intolerable’ hunger and poverty in home counties”. Steve Baker, MP for Wycombe in Buckinghamshire (and lead Brexiter) was apparently shocked by the crisis in food insecurity after a study by Sheffield University researchers revealed that his constituency is one of the worst affected, with a third of his constituents struggling to afford food. He joined a small group of MPs lobbying Sunak to increase Universal Credit (UC).

But when he was given an opportunity to express that concern with his vote, he did as he was told by the Tory whips and abstained in response to Labour’s (non-binding) motion calling for the Government to cancel the cut. Only 4 Conservatives rebelled. Shameful. Shameful. So much so that Olivier De Schutter, the United Nations special rapporteur on extreme poverty and human rights, has written to the UK Government expressing his view that the cut is deliberately retrogressive. As the Guardian reports:

“For these people, £20 a week makes a huge difference, and could be the difference between falling into extreme poverty or remaining just above that poverty line… If the question is one of fiscal consolidation to maintain the public deficit within acceptable levels, then you should raise revenues, not cut down on welfare at the expense of people in poverty.”  

This is clearly a very tricky issue for Conservative MPs, whose government has been in power for now for 11 years, and who have consistently voted in support of austerity measures. Even trickier for those Red Wall MPs, where the levels of hunger and poverty have been endemic for decades. The expected cut of the £20 uplift in Universal Credit is a hot issue with Sunak insisting it was a temporary bonus and Johnson arguing that well-paid jobs are what are needed to alleviate poverty.

But how does this look in the South West, often lumped together with the South East in discussions about ‘levelling up’, and yet facing distinct challenges that have been exacerbated by the pandemic and its fallout?

I live in Teignbridge, one of the most deprived areas in Devon, and I volunteer with one of the local food banks – yes, there are at least three, all busy. I was curious to find out what the impact of cutting £20 would have on the families in food poverty that we support.

I was shocked to discover that according to the Joseph Rowntree Foundation (JRF) cutting Universal Credit by £20 per week will be the largest cut to benefits since the foundation of the welfare state 70 years ago. 6m people will lose £1050 from their annual income, which is already very low. As many as half a million people, including 200,000 children, could be pulled into poverty. How can this be the right policy?

According to the TUC, here in the South West we will have the highest proportion of low-income workers affected by the £80 per month cut: 42.1 per cent of UC claimants. In Teignbridge alone, this could be over 1,000 people, putting many at further risk of food poverty. I looked at the Sheffield University study for the stats on food insecurity, which they have broken down into three groups:

  1. Those who are hungry include people who indicated that they were hungry but were unable to eat food because they could not afford it, or were unable to access food in the previous month.
  2. Those who are struggling to access food, include those who may have sought help within the last month with access to food, have cut back on meals and healthy foods to stretch tight budgets, or indicated that they struggled to access food in some way. In some places the rate is as high as 28 per cent of adults.
  3. Those who worry about food insecurity or being able to continue to supply adequate food for their household. These people may be just about managing but could slip into food insecurity as a result of an unexpected crisis.

In Teignbridge, 2.42 per cent reported being hungry, 8.55 per cent struggling to access food and 12.5 per cent worried about food insecurity. There are 135,000 people in the area, so that means 16,875 of my neighbours are worried about food insecurity. This cannot be ignored, surely? Next door in Torbay, the situation is even worse with 8,595 (6.39 per cent) actually hungry, and if we look at Dorset, 14.25 per cent are struggling to access food – a staggering 61,275 people. All with Conservative MPs. Who all abstained when given the chance to stop the cut. Levelling-up? No. Deliberately allowing their government to take money from the poorest people in their constituencies without even putting up a fight for their rights to a decent standard of living? Yes.

Pre-pandemic levels of social security were already too low, leaving millions in poverty. Benefits were at their lowest level in real terms since 1990 and lowest ever as a proportion of average wages, despite the economy having grown by 75 per cent since then. The Joseph Rowntree Foundation (JRF) calculated that in 2013/14 a family of 3, with one parent working full-time and the other part-time, would have been living £271 above the poverty line. When this cut of £20 a week goes ahead, the family will be living £150 below the poverty line – and in work! This is even worse for people in Teignbridge, as the average hourly full-time pay is only £11.92, in comparison to the South West average of £13.93.

If this were not shocking enough, the charity Turn2us is reporting that there is a very low awareness among claimants that their income is going to fall by £90 a month, and that this comes alongside the increases in energy prices, end of furlough and a rise in the cost of living. The Government have not communicated the cut effectively, relying on text messages to alert people to changes in their online account. One single, unemployed claimant that I contacted reported that he had been utterly shocked when he learnt that the standard rate of £411.51 per month was actually an inflated rate due to the pandemic, and that ordinarily he would have to manage on £324.84 per month. When he applied it was nowhere indicated that the amount was an increase on the ordinary payment, and the first indication he had about the coming reduction was a TV news report. “I didn’t think it even applied to me, as I thought the amount I received was so low anyway. I was in a state of panic when I checked and found the cut did apply to me. It was a horrible shock.” Since the end of August he has received two communications that his Universal Credit will decrease from November, both via his online account. This was the most recent notice:

“We introduced a temporary increase to Universal Credit payments in April 2020 due to the coronavirus (COVID-19) pandemic. This means you have been receiving up to an extra £20 a week (£86.67 a month).

“This temporary increase to Universal Credit is ending soon for all claimants. Your payment on 3 October 2021 is the last time you will receive this extra amount.

“Get help with managing your money in the ‘How to manage your Universal Credit claim’ guide: Help with debt and managing your money.”

Enough said.

However, his ‘work coach/advisor’ has not once communicated or discussed this reduction in person during any of their fortnightly appointments. When he recently broached the subject about how worried he was about the pending cut, he was met with a not unsympathetic but certainly an edgy silence from the other side of the desk. Apparently, he had not been the first to speak of his anguish and concerns.

Another claimant gives a heart-breaking insight into how hard it is to manage:

“Even as a single person who has no children, does not drive and is lucky enough to live with an elderly mum, I can say that managing on £411 per month is very hard. I had to take out a large loan for essential house repairs a few years ago which, along with other bills, takes up three quarters of my UC payment.

“I have to log down literally every penny I spend and keep a beady eye on my bank account so as not to go overdrawn. What few savings I had have dwindled to almost nothing. I dread a broken-down washing machine or, God forbid, the boiler. I can afford to pay my mum next to nothing now, whereas I used to pay my rent and numerous bills for her, as she herself struggles with just her state pension and pension credit.

“There are no luxuries when you live on Universal Credit – no new clothes or frivolous coffees out with friends. At the end of the month, I have to weigh up whether I can afford to catch a bus. I am too embarrassed and ashamed to tell other people how hard up I am due to being unemployed and reliant on Universal Credit. It’s often hard to pretend that everything is OK.

“When I realised that the amount of Universal Credit I receive was going to be cut to £324 a month, I cried, and I have been suffering with bouts of anxiety ever since. I have a disability anyway, which limits what jobs I am suitable for, so I am fearful of what the future holds.”

So why are Johnson and Sunak doing it? Johnson states that policy has to focus on getting people back into work, seemingly ignoring the fact that 37 per cent of UC claimants are already in work. Yes, it will save the Treasury £6bn, but this money would have gone right back into local businesses and stimulated growth just when it is needed, especially in towns like Newton Abbot. As George Eaton in the New Statesman notes, the cuts to UC go against the Government’s levelling up agenda. The system is broken, with a record one in six (17.4 per cent) living in poverty, and the route out of it through hard work is failing. The Government has not even carried out a formal impact assessment, itself against international law, and Therese Coffey (Work and Pensions secretary) is so ill-informed that she claimed an extra 2 hours work would cover the cut! People would have to work an extra 9 hours, and that is without having to cover any additional child-care costs.

The tax and benefit system is broken. It favours the wealthy. The number of billionaires actually increased during the pandemic and their wealth grew by more than a fifth. If Johnson is serious about the levelling-up agenda, he has to be radical and increase income on wealth, not decrease the income of the poorest.

Look up the stats for your area to work out how many families will be affected and lobby your local MP to retain the £20 uplift. Working together we can prevent even more children falling into the poverty trap.

Footnote: Universal Credit is designed to help with living costs and is replacing a range of benefits, such as Child Tax Benefits, Housing Benefit and Job Seeker’s Allowance. The standard allowance for those under 25 on Universal Credit is £344 a month, with over 25s receiving £411.51 a month. Couples under 25 receive £490.66 under the benefits scheme, with couples over 25 getting £596.58.

In September:

  • the standard under-25 rate will be £257.33 per month
  • the standard over-25 rate will be £324.84 per month
  • couples under 25 will get £403.93 per month
  • couples over 25 will get £509.91 per month