Joseph Rowntree Foundation factsheet: why the Government should keep the £20 uplift to Universal Credit

Key figures

• The Government took bold and compassionate action at the start of this pandemic by temporarily uplifting the standard allowance in Universal Credit (‘UC’) and the basic element in Working Tax Credit (‘WTC’) by £20 per week per household.
• New modelling by JRF shows that if the lifeline of the £20 uplift to UC is whipped away in April, 6.2 million families will see an overnight loss of £1,040 and around half a million more people, including 200,000 children, will be pulled into poverty. Families on lower incomes, those with children (particularly single parents), BAME families and families where someone is disabled are disproportionately affected.
• Prior to the pandemic, families had endured successive years of income stagnation caused in part by cuts and freezes to social security. Though the temporary uplift goes some way towards making up the shortfall, families will still receive significantly less help from the social security system than a decade ago and those who lose their jobs during the pandemic will still experience very significant reductions in income even if previously only paid at minimum wage level.
• The OBR is projecting that unemployment will rise to 7.5% in Q2 2021 – just as the £20 lifeline is planned to be cut – and will remain high for many years. The Government must support families to get back on their feet, rather than increasing susceptibility to debt and harm to mental and physical health by cutting incomes as unemployment rises.
• Maintaining the £20 uplift already commands considerable cross-party support, including from Parliament’s Work & Pensions Committee, Treasury Committee, Lords Economic Affairs Committee, former Conservative Work & Pensions Secretaries, as well as almost all opposition parties and faith leaders.
• Over 60 organisations and religious leaders have publicly expressed deep concern about the Government’s failure to give people certainty that their incomes won’t be slashed by £1,040 in April. Polling from the Health Foundation and Ipsos MORIfound 59% of the public support making the uplift permanent, including 42% who strongly support it.
• Throughout this pandemic, people receiving ‘legacy’ benefits have been unjustly excluded from the £20 uplift despite most of them being disabled, sick or carers. The majority of people who claim disability benefits are on legacy benefits rather than UC. It is only right that people claiming legacy benefits should be thrown the same £20 lifeline as people in similar circumstances claiming UC.
• the Government should make the uplift to UC and WTC permanent and extend this same support to those on legacy benefits. Our new estimates suggest keeping this lifeline for families on UC/WTC will cost around £6.4 billion in 2021/22, and a further £1.9 billion to extend it to legacy benefits.

Groups most affected

• The impact of cutting the £20 increase to Universal Credit will be greatest in the North of England, Wales, the West Midlands and Northern Ireland – areas that already had high rates of poverty and have been worst affected by this economic downturn. This means many ‘Red Wall’ constituencies that the Government has pledged to level up will instead see a large blow to their livelihoods and local economies.
• Losses will disproportionately be shouldered by families on low incomes, with around 60% of the families who lose out being in the bottom 30% of the income distribution.
• Families with children will be disproportionately impacted, particularly single-parent families: around 60% of all single parent families in the UK will experience this overnight cut to their incomes.
• Over half of families losing out contain someone who is disabled and a fifth are BAME families, meaning these groups are also disproportionately affected.

Illustrative tables

ENDS