Social Justice

Universal credit cut will 'suck billions out of local economies' from October

Researchers warned the universal credit cut, expected in a little over a month, could mean poverty for one in five families where at least one person is aged between 16 and 64

More than a fifth of Britain’s working-age families will soon be forced to make ends meet on £1,040 less per year despite already being on low incomes, according to new analysis, as experts urge Boris Johnson “it’s not too late” to reverse the universal credit cut.

Deprived people in Yorkshire and the Humber, the West Midlands and the North East and North West of England will bear the brunt of the cut when ministers roll back the £20-per-week increase – introduced at the start of the pandemic to support people relying on the benefit – in September, Joseph Rowntree Foundation (JRF) analysts warned.

“Plunging low-income families into deeper poverty and debt as well as sucking billions of pounds out of local economies is no way to level up,” said said Katie Schmuecker, deputy director of policy and partnerships for the JRF, who called the cut “the biggest overnight cut to the basic rate of social security since the Second World War.”

The analysis “lays bare the deep and far-reaching impact” the cut will have on the more than 5.5 million people claiming universal credit, she added, warning it will “cut living standards”.

Many people receiving the benefit have already received letters telling them the date of their last payment at the current level, posting pictures to social media with concerns about how they will pay their bills.

https://twitter.com/miniabbysciuto/status/1427608837608067073?s=20

Jonathan Reynolds, Labour’s shadow work and pensions secretary, said the cut will be “a hammer blow to millions of families, hitting the lowest paid hardest and hurting our economic recovery.”

“Time is running out for the Conservatives to see sense, back struggling families and cancel their cut to universal credit,” Reynolds added. “Labour would maintain the uplift until we can replace universal credit with a fairer social security system.”

Researchers used the latest government figures across universal credit and child and working tax credits to assess the impact on households where at least one person is aged between 16 and 64.

“The temporary uplift to universal credit was designed to help claimants through the economic shock and financial disruption of the toughest stages of the pandemic, and it has done so,” a government spokesperson said in response to the report.

The decrease will hit families with children even harder, according to the study.

In 413 of Britain’s 632 parliamentary constituencies, more than one in three of such families will lose out on income as a result of the cut.

More than 191 of those constituencies are held by the Conservatives. Families in Peterborough, where 64 per cent of families with children receive the benefit, are most at risk. 

But the reduction in payments will have the greatest impact across Labour constituencies, including in Bradford West, where 82 per cent of families with children claim universal credit.

“MPs from across the political spectrum are already expressing their deep concerns about this planned cut,” Schmuecker added. As well as opposition from Labour politicians, the prime minister is facing a significant revolt from around 60 Tory MPs who want the government to scrap the universal credit cut. 

“It’s not too late for the prime minister and chancellor to listen to the huge opposition to this damaging cut and change course,” she added.

The government spokesperson added: “Universal credit will continue to provide a vital safety net and with record vacancies available, alongside the successful vaccination rollout, it’s right that we now focus on our plan for jobs, helping claimants to increase their earnings by boosting their skills and getting into work, progressing in work or increasing their hours.”

Support the Big Issue

For over 30 years, the Big Issue has been committed to ending poverty in the UK. In 2024, our work is needed more than ever. Find out how you can support the Big Issue today.
Vendor martin Hawes

Recommended for you

View all
I started doing crime by age 6. I didn't know any other life – all my birthdays were in prison
Crime

I started doing crime by age 6. I didn't know any other life – all my birthdays were in prison

Will free school meals and vouchers be offered over the Easter holidays?
Free school meals/ Easter holidays
Free school meals

Will free school meals and vouchers be offered over the Easter holidays?

Council tax is going up for millions in April. Here's what to do if you're struggling to pay
council tax/ houses
Cost of living crisis

Council tax is going up for millions in April. Here's what to do if you're struggling to pay

Water bills are going up in April 2024. Here's what to do if you're struggling to pay
Cost of living crisis

Water bills are going up in April 2024. Here's what to do if you're struggling to pay

Most Popular

Read All
Renters pay their landlords' buy-to-let mortgages, so they should get a share of the profits
Renters: A mortgage lender's window advertising buy-to-let products
1.

Renters pay their landlords' buy-to-let mortgages, so they should get a share of the profits

Exclusive: Disabled people are 'set up to fail' by the DWP in target-driven disability benefits system, whistleblowers reveal
Pound coins on a piece of paper with disability living allowancve
2.

Exclusive: Disabled people are 'set up to fail' by the DWP in target-driven disability benefits system, whistleblowers reveal

Here's when UK households to start receiving last cost of living payments
next dwp cost of living payment 2023
3.

Here's when UK households to start receiving last cost of living payments

Strike dates 2023: From train drivers to NHS doctors, here are the dates to know
4.

Strike dates 2023: From train drivers to NHS doctors, here are the dates to know