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Employment

Work and universal credit is failing to keep UK workers out of poverty

Single workers still fall short of an acceptable income when they work full-time on a living wage, the Joseph Rowntree Foundation found

Millions of Brits are falling short of the minimum income needed to live secure and stable lives even if they are on universal credit or earn the national living wage, anti-poverty experts have warned. 

The Joseph Rowntree Foundation’s annual Minimum Income Standard (MIS) report found single people would still be £3,000 short of an acceptable income to cover rent, food and other essential costs even while working full-time on a living wage.

A couple with two children who are out of work and relying on benefits would fall around £14,000 short of the necessary income, rising to around £20,000 for couples without children. Only if the couple were both working full time on the national living wage and received universal credit would they be earning just over the £34,200 required to make ends meet, researchers said.

Social security should be strong enough for all of us when we need a lifelineIain Porter, policy and partnerships manager at the Joseph Rowntree Foundation

<span style="font-weight: 400;">Iain Porter, policy and partnerships manager at the Joseph Rowntree Foundation</span>

JRF has urged the UK government to prioritise the creation of decent jobs and keep the £20 increase to universal credit beyond October 1 when it is due to be cut to boost the country’s economic rebuild following the Covid-19 pandemic.

“It is deeply concerning that millions of households across our country are having to live on incomes that fall so far short of what the public thinks is needed for a minimum standard of living,” said Iain Porter, policy and partnerships manager at the Joseph Rowntree Foundation.

“Social security should be strong enough for all of us when we need a lifeline, but cuts and freezes in recent years have left it to wear thin and threadbare. We urgently need to restore public confidence by investing in adequate social security support for families when they need it.

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“It would be a terrible mistake for ministers to instead weaken universal credit further by going ahead with the planned £20-a-week cut this October, leaving millions of families unable to meet their needs.”

A government spokesperson told The Big Issue it would focus on helping people in need to “learn new skills to progress in their career, increase their hours or find new work”.

Get free training, careers advice and access to hundreds of thousands of jobs with The Big Issue’s RORA Jobs & Training

JRF has produced the study every year since 2008 and, with the help of Loughborough University, quizzes members of the public in different groups to define a minimum income standard to pay for a basic level of household needs.

The 2021 iteration found unstable work, inadequate pay and a sub-par benefits system is stopping people on low incomes from reaching the standard.

JRF experts said single people needed to earn £20,400 a year to reach an income that will enable them to cover rent, housing costs, food and other bills. But millions of single workers fall short as they only earn £17,400 working full-time on the national living wage.

Those in part-time work fall even further from the minimum income standard and, while 80 per cent of employed people with children still work full-time, the precarity of work has restricted job options for younger adults during the pandemic.

A single parent will fall £46-a-week short of an MIS even while working full-time on a living wage and would need to reach £27,500 to have an acceptable income. If the universal credit cut goes ahead in October, that gap rises to £66-a-week and hits £140-a-week if they are out of work.

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Two-parent families find themselves 40 per cent below an MIS if they are out of work, even with the £20 universal credit increase introduced during the pandemic.

If both parents work full-time on a national living wage, they will both earn £17,400 a year and just about exceed the MIS of £34,200.

The findings show the need to keep the £20 universal credit increase, JRF experts said.

When they are at their most vulnerable, people need support, not the threat of destitutionDr. Dora-Olivia Vicol, executive director of the Work Rights Centre

<span data-ogsc="black">Dr. Dora-Olivia Vicol, executive director of the Work Rights Centre</span>

Abigail Davis, one of the report’s authors and associate director of Loughborough’s Centre for Research in Social Policy, said: “As Covid constraints lift for many, it’s worth bearing in mind that for a lot of households the restrictions of not being able to go out, take kids to after school activities or go on a family holiday remain because those are the things people go without when there isn’t enough to make ends meet.

“Taking money away from low-income households will make it even harder for them to meet this standard of living.”

Dora-Olivia Vicol, executive director of the Work Rights Centre, told The Big Issue removing the £20 universal credit increase threatens to have a bigger impact on migrant workers.

“The planned cuts to universal credit will be devastating for families who struggle to make ends meet,” said Dr Vicol. “Ending the £20 uplift would mean returning to one of the least generous welfare systems in the OECD. This is unlivable.

“A decent welfare system can constitute a real lifeline. We just need to stop seeing it as a drain, and acknowledge that, when they are at their most vulnerable, people need support, not the threat of destitution.”

A spokesperson from the Department of Work and Pensions said the universal credit increase will end on October 1 with the government switching its focus towards helping people into work through its Kickstart and Restart schemes.

A government spokesperson said: “The temporary universal credit uplift was brought in to support those with the lowest incomes during the pandemic. Now that restrictions are ending it is right that the government should focus its support – through our multi-billion-pound Plan for Jobs –to help people learn new skills to progress in their career, increase their hours or find new work.”

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