Universal Credit: £20 uplift should be extended for 12 months, MPs say

The Government must extend the £20 weekly increase in Universal Credit payments for at least a year to prevent hundreds of thousands of families plunging into poverty, MPs warned today.

The temporary uplift, introduced last March and worth more than £1,000 a year to those aged over 25, is currently due to end at the end of next month, with the Government already under pressure from campaigners and some of its own MPs to extend it.

The Chancellor Rishi Sunak is understood to be baulking at the £6.4billion cost of extending the boost for another 12 months, and has reportedly been considering one-off payments of £1,000 or £500 for claimants instead. 

6 Tory MPs, including former Work and Pensions Secretary Stephen Crabb, have already rebelled against the Government and called for it to extend the £20 uplift to Universal Credit

But removing the payments in April would plunge hundreds of thousands of families into poverty and drag those already in it ‘down into destitution’, according to a new report from Parliament’s Work and Pensions Select Committee. 

The Government must keep the uplift in place for another 12 months ‘at the very least’, the committee said, if it did not make the increase permanent.

The committee’s chairman, Labour MP Stephen Timms, said removing the payment would ‘represent a failure by Government’.

The issue has already seen six Conservative MPs rebel against the Government by joining with Labour three weeks ago in a symbolic vote calling for the £20-a-week boost to be extended. 

One of the rebels, Jason McCartney, the MP for Colne Valley in West Yorkshire, told This is Money: ‘Whilst we are still fighting the pandemic the most straightforward way we can get cash into the pockets of those who need help most is by maintaining this uplift.’

Under the current plan to phase out the boost, the amount paid to a single person aged 25 or over would fall by a fifth in April, from £409.89 to £324.84.

Couples aged over 25 meanwhile would lose 14 per cent of their monthly benefit, with the amount received falling from £594.04 to £509.91 if the uplift is not extended.

The Chancellor boosted the tax credit element of Universal Credit by around £20 a week in March last year to support those whose incomes were hit by the coronavirus pandemic

The Chancellor boosted the tax credit element of Universal Credit by around £20 a week in March last year to support those whose incomes were hit by the coronavirus pandemic

There were 5.83million Universal Credit claimants in November last year, during the second lockdown. Meanwhile 2.64million were unemployed, claiming either job seeker’s allowance or Universal Credit while looking for work last December.

This ‘claimant count’ has risen by 113 per cent since last March.

‘With 39 per cent of those on Universal Credit in work keeping the uplift beyond April is also a good way to help the Government in preparing for an uncertain labour market’, Mr McCartney added.

Rather than extend the uplift further at an estimated cost of £6.4billion, the Chancellor has reportedly been considering ways to phase out the extra payments.

Some 2.64m people were claiming Universal Credit or job seeker’s allowance while looking for work in December 2020 – a rise of 113% since March

An ‘ally’ of Rishi Sunak told the Financial Times last month the uplift would cost ‘the equivalent of putting 1p on income tax and adding 5p a litre on fuel duty’. 

They added: ‘Hopefully this will help focus minds among Conservative colleagues on what we value most.’

Instead, the Treasury is reportedly considering replacing them with one-off payments of £1,000 or £500.

But those proposals were criticised by those which gave evidence to the committee, who said lump sum payments ‘make no policy sense whatsoever.’

Temporary boosts to the benefits system have cost the Treasury around £8.3bn this year, with an extension to the £20 uplift potentially costing £6.4bn in 2021-22 according to a charity

Temporary boosts to the benefits system have cost the Treasury around £8.3bn this year, with an extension to the £20 uplift potentially costing £6.4bn in 2021-22 according to a charity 

It could destabilise people’s budgets, people with addiction or substance misuse problems could relapse and it could push other claimants over the threshold for support such as debt relief, they said.

Work and Pensions Secretary Therese Coffey said a one-off payment was one of the options the Government has been considering, but would not be one of her department’s ‘preferred approaches’.

This is due to not knowing how long the economic impact of the pandemic will last, concerns around fraud, potential disincentives to taking or increasing work, and that a steady sum of money would be more beneficial.

Work and Pensions Select Committee chairman Stephen Timms said removing the £20-a-week uplift would be a 'failure'

Work and Pensions Select Committee chairman Stephen Timms said removing the £20-a-week uplift would be a ‘failure’

Stephen Timms, chairman of the Work and Pensions Committee, said: ‘Removing the extra payment in March would represent a failure by Government – failure to recognise the reality of people struggling.

‘Without regular support, hundreds of thousands of families will be swept into poverty or even destitution. Government must end the uncertainty and commit to extending this lifeline.

‘The Chancellor faces difficult decisions about the public finances. He may find it hard at present to make the increase permanent. 

‘But the pandemic’s impact on the economy and livelihoods will, sadly, be with us for some time. An extension for a year should be the bare minimum.

‘We must also hope that Rishi Sunak will listen to the groundswell of arguments against one-off payments as an alternative, including from his cabinet colleague at our Committee last week. There is broad agreement that a steady income is necessary to support people.’

Iain Porter, policy and partnerships manager at the charity the Joseph Rowntree Foundation, said the uplift should be retained for at least a year and extended to people claiming legacy benefits.

He said: ‘A short term extension of anything less than 12 months is not the answer as it would cut support for the poorest in our society just as unemployment is expected to peak later this year and remain high for some time.

‘There is a widespread consensus that cutting benefits now would be a terrible mistake as it will have devastating consequences for people’s health and ability to recover from this economic crisis, as well as for our economy and local communities that the Government has committed to level up.’

A Government spokesman said: ‘We are committed to supporting the lowest-paid families through the pandemic, which is why we’re spending hundreds of billions to safeguard jobs, boosting welfare support by billions and have introduced the £170million winter grant scheme to help children and families stay warm and well-fed during the coldest months.’

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