Last week’s Budget announcement that Universal Credit will be cut by £20 a week in October is a setback for families. Imran Hussain, Director of Policy & Campaigns at Action for Children outlines why this choice hurts children – and how the decision could still be reversed.
The Budget announcement that Universal Credit will be cut by £20 a week in October is a setback for families – it is estimated that 2.5 million families with children currently on Universal Credit or Working Tax Credit will miss out on a combined total of £1.3 billion this year.
Here are five reasons why taking more than £500 in the next financial year (£1000 a year afterwards) from low income families will hurt families with children:
- It would mean turning back to benefit levels that are low historically and internationally – UK unemployment benefits are the weakest in the OECD, after a decade of cuts that have hit in-work and out-of-work benefits.
- Cutting Universal Credit will see child poverty – already high – rising sharply in the next few years, according to the Resolution Foundation. The only year expected to show a fall in child poverty will be 2020-21, the year of the increased Universal Credit rate.
- Even with the £20 increase, many families Action for Children works with have struggled financially. Making the families we work with £1000 a year worse off is going to damage childhoods and life chances.
- Nor does stripping back support later this year make sense when we know unemployment is not going to return to pre-pandemic levels for some time. Last week the Office for Budget Responsibility said higher unemployment will be with us for some time.
- That’s unemployment; but there are also many families who are seeing – or will see in the next couple of years – significant cuts to their pay and hours. Cuts to Universal Credit hits the low paid, not just those out of work.
But there is good reason to believe the battle is not over, that the Government could end up deciding that it won’t cut Universal Credit:
- The strength of the campaign pushed the Government further than it wanted. Action for Children’s report on its Emergency Fundwas among the first to argue against the cut, but many others, not just those working on poverty issues, have also made the case. And we know that GMPA has been adding its voice to this campaign.
- There’s also concern within the ranks of the Government’s own MPs. In January 2021, the Government was so worried about a rebellion on the issue it ordered its MPs to abstain on a vote on extending the uplift.
- Tim Pitt,a former adviser to ex Chancellor Philip Hammond, argues that the Government should strengthen the safety net because its voting coalition is now so different than in the past. Cutting Universal Credit is pain that would be felt by those in ‘Red Wall’ seats which formed the bedrock of its majority.
- Crucially, public opinion on benefit levels is changing, with more people now agreeing that benefit levels are low.
- Fundamentally, the pandemic has revealed that our support for the low paid and for those who lose their jobs is simply not good enough. It’s self-evidently a view the Government accepted when it increased Universal Credit.
Money matters for childhoods, life chances and the fight against poverty. That’s what the research shows and what anyone working with families knows.
So, it is encouraging in the sense that the battle is not over and there’s growing recognition in politics and society that we need to strengthen social security support.
A longer version of this article is available on the Action for Children website.