Universal credit claimants will keep 45p for every £1 they earn at work, starting in December. Image: Pexels
Emma, a mum of three in Kent, and her husband were already forced to skip meals and go without heating before the government cut universal credit by £20 per week. And she’s one of thousands who will see little benefit from the changed taper rate announced in Rishi Sunak’s Budget.
Around 40 per cent of people currently relying on universal credit are already in work, but at present they lose 63p from their benefits for every £1 earned through their jobs.
The chancellor admitted this is a “hidden tax on work”, and said he will lower this to 55p by December. But for Emma’s family, it provides little reassurance ahead of a difficult winter.
“It’s bittersweet at best,” the 29-year-old told The Big Issue. “It’s better than nothing and will reduce the shortfall we’ve got. If I’m optimistic about it, I’d say it might make a slight difference. But it won’t make the big impact we desperately need.”
At the start of the pandemic, Emma’s husband was placed on furlough from his job with a beer and wine wholesaler. It pushed the family even deeper into hardship.
He is now back at work and earning above the minimum wage, meaning his pay will largely stay the same after today’s budget, but the cut to universal credit means the family’s income is still too low to make ends meet.
Meanwhile health issues and eye-watering childcare costs – she would have to pay out £900 per month, nearly as much as the family’s rent – mean Emma can’t afford to work.
“People said, you knew [the cut] was coming, why didn’t you prepare for it? But if you don’t have anything in the first place, you can’t prevent it,” she said.
“You just watch it looming ahead, it was torture – especially in the same month energy prices started to spiral, and two months before Christmas. It couldn’t have come at a worse time.”
The family’s income will be cut further in April when ministers increase national insurance to fund the NHS.
She was “unsurprised” that the chancellor didn’t announce any changes that would help her family stay afloat, and feels trapped in a situation in which “the only bill [the family] can change is [their] food bill, by eating less and worse”.
It is a myth that people want to rely on the state for income, Emma said, adding that a government-mandated pay rise for her husband – earning more than minimum wage but too little to be able to support his family – and others like him would have made the most difference to her in the spending review.
“Our universal credit would go down, but we’d have a bit more control over our own finances rather than someone else controlling the money side of things,” she said. “I’d love for the people making decisions to spend a day in my shoes.”
Speaking in the House of Commons, the chancellor said this autumn budget heralded a “new age of optimism” in the UK economy.
But Caroline Rice, a childminder and mother of one in Northern Ireland, told The Big Issue she doesn’t see how today’s Budget aligns with the government’s “levelling up” mission – because it does little to “ensure every child has the right to succeed”.
The 48-year-old said the changed taper rate could mean she keeps roughly £25 to £30 extra from her earnings each month, but that she will still be out of pocket and struggling to afford necessities after the £20-per-week cut.
“If I was earning that much money, I wouldn’t need universal credit,” she said.
The cut, made officially on October 6, is yet to materialise in her payments. But she expects to see a reduced amount paid into her account before the end of the month. “I’ve just felt sick. I’ve avoided thinking about it,” she said.
“I manage my money very well. But money can only stretch so far.”
Caroline can’t compromise on all the necessities – she needs the internet at home to manage her universal credit account, a car for work and to keep the heating on when she’s looking after children – but she had already “reduced everything” before the cost of living crisis took hold of the UK.
“It’s going to be a very dark winter,” she said. “You’re constantly switching the lights off and trying to calculate if it’s cold enough to put the heating on.
“This budget does nothing for most people on universal credit,” Caroline added. “We hear all this talk about giving children opportunities, helping all children to succeed. But there are so many children living in poverty and stuck there. That’s not levelling up.”
If the government thinks it is providing a ladder to people on low incomes, “the rungs are too high”, she said.
“There’s no realistic way to pull up people who are in the pits of despair and poverty. The majority of us have aspirations to get off benefits. But most of the support is only available to people who have already been lifted out of the hole.”
Sunak’s Budget provides even less comfort to people like Aurora who aren’t in work and rely on universal credit. It shows that swathes of people have been “entirely forgotten” by the government, said the mother who lives in London.
Childcare costs have locked her out of employment during the pandemic, but the benefit cap – limiting the amount of money someone can receive from the state, even if the government calculates their entitlement as an amount above the cap – means she did not even receive the £20 increase. Sunak’s Budget announcement included no policies that will make a difference to Aurora, who pays 95 per cent of her benefits towards rent and is in arrears.
“I just can’t believe we’ve been ignored again,” she told The Big Issue. “We haven’t had our heating on this month because we can’t afford it.
Government claims to be helping low-income parents back into work are “flimsy”, Aurora said, when people like her want to work but face “so many barriers and hoops to jump through”. Even if she could secure funding for childcare, many of the jobs she has seen require being available for shifts at such short notice she would not have time to arrange it.
“I’ll probably be made homeless at some point. I know it, but there’s nothing I can do to stop it. We’re powerless.”
Today’s announcement was a “tale of two Budgets” for families on low incomes, said Katie Schmuecker, deputy director of policy and partnerships for the Joseph Rowntree Foundation.
While the change in taper rate and minimum wage increase are “very positive steps”, millions of people will not benefit from the new policies, Schmuecker added. People across the UK who are unable to work or are looking for work now have the lowest basic rate of out-of-work benefits in real terms since around 1990.
“Among the people in our society who cannot work are cancer patients, people with disabilities and those caring for young children or elderly parents,” Schmuecker added. “Their energy bills and weekly shop are going up like everyone else’s and they face immediate hardship, hunger and debt in the months ahead.
“The chancellor had an opportunity to support families on the lowest incomes to weather the storm ahead, and he did not take it.”
Emma, Caroline and Aurora take part in Covid Realities, a Nuffield Foundation-funded research programme which has been documenting life on a low income during the pandemic.
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