TUC - number of workers on universal credit up by 1.3 million since the eve of the pandemic

• 130% rise in working claimants during the pandemic
• Low-income workers facing “perfect storm” this spring unless ministers improve “woefully inadequate” levels of support, warns union body
• Cost-of-living crisis already depressing value of UC, TUC analysis reveals
• *NEW POLL* shows many families already struggling to make ends meet

The TUC has today (Monday) warned that millions of low-income workers face a “perfect storm” this April with universal credit (UC) falling behind the cost of living as energy bills and taxes rise.

The warning comes as new TUC analysis reveals that the number of workers on UC has increased by 1.3 million since the eve of the Covid-19 pandemic.

The analysis of official statistics shows that over 2.3 million workers were in receipt of UC at the end of 2021, compared to just over one million on the eve of the pandemic in February 2020.

This represents an increase of 130 per cent over the last two years and means 1 in 14 (7.2 per cent) working adults now claim UC.

The TUC says the huge rise in UC recipients has been driven by working households being pushed into financial hardship during Covid, with millions facing a cost-of-living crunch this year.

Basic value of universal credit now lower than at start of pandemic

The TUC says that the basic value of UC is now lower than at the start of the pandemic as a result of UC not keeping up with inflation.

TUC estimates show that the value of UC has fallen by £12 a month in real terms when measured against CPI inflation and £21 a month when measured against RPI inflation compared to just before the pandemic (February 2020).

The TUC says this trend will only get worse in the months ahead with inflation forecast to rise further.

Struggling to cover the basics

The TUC warns that millions of low-paid families face a crunch point in April when energy bills and national insurance contributions go up – at the same time as UC continues to fall in value.

New polling - carried out for the union body before last week’s energy cap announcement and Bank of England forecasts - shows that many are already struggling to make ends meet:

• One in eight workers (12 per cent) say they will struggle to afford the basics in the next six months. And a fifth of working people (22 per cent) say they’ll struggle to afford more than the basics.
• Low-paid workers are more likely to be struggling. One in six (17 per cent) low-paid workers (those earning less than £15,000 a year) say they will struggle to afford basics in the next six months, and three in 10 (29 per cent) say they’ll struggle to afford more than the basics.

Parents of young children, disabled workers, key workers and BME workers are more likely to be struggling:

• Nearly one in five families (18 per cent) with kids under 11 will struggle to afford the basics
• Over one in five (21 per cent) disabled workers will struggle to afford the basics, compared to 10 per cent of non-disabled workers
• 14 per cent of key workers say they’ll struggle to afford the basics in the next six months, compared to 10 per cent of non-key workers
• 14 per cent of BME workers say they’ll struggle to afford the basics in the next six months, compared to 11 per cent of white workers

The poll also reveals that a fifth of workers (21 per cent) say they have Christmas debts to pay off this year – a number that rises to over a quarter (28 per cent) for workers with children of school age.

Better support needed

The TUC says the government must do far more to help struggling households to get through the months ahead.

The union body says the cost-of-living support announced by the Chancellor on Thursday is “woefully inadequate” and will provide families with just £7 extra a week – most of which will have to be repaid.

The TUC is also calling for government to use the upcoming spring budget to:

• Increase to UC to 80 per cent of the real Living Wage.
• Introduce a windfall tax on energy companies, using the money to reduce household energy bills
• Boost the minimum wage to least £10 an hour now
• Work with unions to get pay rising across the economy

TUC General Secretary Frances O’Grady said:

“Millions of low-paid workers face a perfect storm this April.

“At the same time as energy prices and national insurance contributions shoot up, universal credit is falling in value.

“The government must do far more to help struggling families get through the tough times ahead. The support package announced by the Chancellor last week is woefully inadequate.

“Universal credit urgently needs boosting and we need further action to reduce fuel costs for those battling to make ends meet.

“Oil and energy companies shouldn’t be making bumper profits, while many struggle to heat their homes.

“If ministers fail to do what is necessary, more households will be pushed below the breadline.”

On the need to boost pay Frances added:

“The best way to give working families long-term financial security is to get pay rising across the economy.

“That means increasing the minimum wage to at least £10 an hour now, and ministers requiring employers to negotiate sector-wide fair pay agreements with unions.”

ENDS

Notes to editors:

- UC analysis: Analysis of the number of working claimants on Universal Credit comes from official figures provided at Stat-Xplore, looking at the number of people on Universal Credit in employment between February 2020 and November 2021.

- The fall in the real value of the Universal Credit standard allowance is calculated by taking the value of the standard allowance in February 2020 and December 2021 and adjusting for inflation. December 2021 has been chosen as it's the most recent month with available inflation data. For both CPI and RPI, the index month is Dec 2021.

- Polling: BritainThinks conducted an online survey of 2,209 workers in England and Wales between 14th and 20th December 2021, based on the same nationally representative sample criteria as previous waves.

- In BritainThinks’ survey, workers were asked whether they considered themselves keyworkers or not. Therefore, in this context, this refers to self-defined key workers.