When announcing his roadmap out of the pandemic the Prime
Minister pledged not to ‘pull the rug out’ from under people who
needed support.
Ahead of the Chancellor’s Budget on Wednesday, the independent
Joseph Rowntree Foundation has set out five tests which need to
be passed for the Government to make good on that pledge and
loosen the grip of poverty.
JRF’s team of analysts, economist and policy experts will be
available for immediate responses on Wednesday as well as
analysis during the day and an overnight briefing assessing the
overall impacts on poverty.
Five tests:
-
Has the Chancellor extended the £20 uplift to Universal
Credit and Working Tax Credit for at least another
year?
Taking this lifeline away will result in an overnight cut in
income of £1,040 per year for 6 million families. It will pull an
estimated 500, 000 people into poverty, including 200,000
children. The 6-month extension reported as the
Chancellor’s preference is a short-term fix that would simply
delay this pain until the worst possible moment. It
would cut out of work support to its lowest level since 1990,
just as unemployment peaks in the autumn and jobs remain scarce.
We also need to see the Chancellor extend this same lifeline to
people on ‘legacy’ benefits who have so far unjustly been left
behind.
-
Has the Chancellor announced measures to protect jobs
and help the unemployed back into work?
We want to see the CJRS extended to cover businesses who can
demonstrate negative business impact as a result of ongoing Covid
restrictions. As restrictions are lifted, we want to see a
cautious phasing out of furlough which encourages more workers
being kept on part time, rather than fewer full time. We also
want to see details of a comprehensive plan to tackle
unemployment, supporting people to retrain and get back into
work.
-
Has the Chancellor announced measures for England to
support those in rent arrears and at risk of eviction?
At least 700 000 renters are already in arrears putting them at
risk of eviction. Around 2.5m households say they are worried
about paying their rent. Scotland and Wales have introduced
schemes to help people in this situation. We want to see more
money for discretionary housing payments in England to help
people in arrears.
-
Has the Chancellor set us on a course for recovery that
leaves no one behind?
It is important the Chancellor listens to the many economic
voices saying that he should bake in recovery before addressing
the public finances. Now is not the time for tax rises that would
slow the recovery. We want to see evidence of new spending to act
as a stimulus to help a faster economic recovery and avoid people
being pushed into poverty by long term unemployment.
-
What does the Chancellor’s budget mean for poverty in
the UK?
Looking across the measures announced, we will make an assessment
of whether this is a budget which has ‘wrapped its arms’ around
those families in poverty who have been hardest hit by the
pandemic and stopped other from being pulled into poverty.
Key background on the £20 uplift on Universal Credit
- Unemployment now stands at 5.1 % and is not
forecast to peak until later this year, just as the
6-month extension would end – cutting unemployment support at
the very moment it is most needed.
- In the third quarter of 2021 the unemployment rate is still
expected to be well above its current high rate, with the OBR
forecasting 7.4% and the Bank of England 7.8%. The OBR predicts
that the unemployment rate will stay above 7% (2.4
million people) until the Spring of 2022.
- Extending the uplift for 6 months will not prevent a
predicted 500,000 people being pulled into poverty, including
200,000 children – only delay it until unemployment is forecast
to be even higher.
- A 6-month extension fails to reflect economic reality. It
also fails the 6.2 million families who are relying on
Universal Credit or Working Tax Credit to stay afloat during
this crisis and are facing a cut of £1,040 to their annual
income.
A member of JRF’s Budget Advisory Group who has experience of
poverty told us: “A lot of families are really struggling
and getting into debt. Six months is not good enough, it
should be a year, until things get back to whatever
‘normal’ is going to be. I am really quite concerned. I just
don’t think the Government knows what it’s like for working-class
families at the moment.”
Another member of JRF’s Budget Advisory Group with experience of
poverty said: “One of the things I’d like from the Budget
is for them to understand that the £20 is not about giving people
anything, it’s that they were living on too little to begin with.
Who can survive on that little money? Taking away nearly
£1,000 a year from people who don’t have enough to live on is
going to be catastrophic.”
Notes to editors
Our latest briefing on why the £20 uplift to Universal Credit
must be kept for at least the next fiscal year is available
here
(February 2021).
Our blog on the places most at risk of being pulled under if
Universal Credit and the furlough scheme are removed is here
(February 2021)
