Four million families will be more than £1,000 a year worse off when the increase to Universal Credit ends in April, warns a new report.
People have been receiving an extra £20 per week because of the COVID-19 pandemic, but it’s due to end in six months.
An Institute for Fiscal Studies (IFS) report says millions of families will lose 13% of their benefits – around £1,040-a-year.
The IFS says it will mean a “significant decline” in the finances of many people, though some will be worse hit than others.
“For some, the proportional fall will be much greater,” the report states.
“For example, a childless, non-disabled, single owner-occupier with no other source of income would see a 21% decline in benefits.
“If the government instead chooses to make this increase permanent, it would add about 10% to the long-run cost of Universal Credit, though would undo at most two-thirds of the benefit cuts made since 2015, let alone those made during the coalition.”
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The government has so far resisted pressure to extend the extra money past April next year.
Boris Johnson twice evaded the question when asked at last week’s Prime Minister’s Questions if he would consider making the £20 increase permanent.
When pressed by the SNP’s Ian Blackford a second time, he said the government was “putting another £1.7bn into Universal Credit by 2023 to 2024” – but said nothing about keeping the increased payments.
Mark Franks, from the Nuffield Foundation – which campaigns on social well-being and access to education, says there needs to be a “sustainable” support plan in place.
He said: “The government made some necessarily rapid changes to working age benefit policy, which have played a vital role in helping to support millions of families through the first six months of the economic crisis.
“As the economic fallout continues, the government now needs to make longer-term decisions about how best to provide sustainable support for those who have lost their livelihoods as a result of the pandemic.”
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A Department for Work and Pensions spokesman said the government is “wholly committed” to helping the lowest-paid families and has already taken “significant steps” to help – including raising the Living Wage, ending the benefit freeze and increasing work incentives.
He added: “During this challenging time we have provided £9.3bn extra welfare support to help those most in need, as well as introducing income protection schemes, mortgage holidays and additional support for renters, and constantly keep these measures under review.”