Rishi Sunak’s decision to cut Universal Credit in six months will pull 500,000 more people into poverty

Decision comes despite warning of mass unemployment by the end of the year.

Rishi Sunak’s decision to end the £20 per-week uplift to Universal Credit in six months will cut the incomes of struggling households by over £1000 a year and plunge 500,000 people into poverty, including 200,000 children.

This is the stark warning from the Joseph Rowntree Foundation (JRF), just hours after the Chancellor announced in the Budget that the Universal Credit boost will remain until the end of September this year.

Asked today if the uplift may continue past this time, Rish Sunak said: “No, we put this in place at the beginning of the crisis last year to help people in the national lockdown.

“Obviously the restrictions have gone on for longer than any of us would have hoped or liked.

“But six months’ extension to the Universal Credit uplift means it will be in place well beyond the end of this national lockdown.

“And remember, it’s just one of the things we’re doing to help people.”

He added that there was currently no plan to remove the £20 per-week increase over time to help ease the pain felt by families across the country.

It comes as the latest forecasts by the Office for Budget Responsibility (OBR) show that unemployment is expected to rise by a further 500,000 by the end of the year.

The JRF argues that cutting Universal Credit in six months will mean that the main rate of unemployment support will be at its lowest since 1990.

Caroline, a childminder from Northern Ireland, told the JRF: “This decision is another cliff edge to dread. It leaves us facing the winter months with uncertainty again.

“We don’t know how the economy will recover, yet we face more insecurities for those on low income and on Universal Credit.

“Through Covid Realities, I know that so many families face this insecurity, and it’s just making our daily life – which is already so difficult – only harder still. I wish things could be different. I wish the government would listen to us.”

Lola, a parent of two from the south-east, said: “This short-term decision on Universal Credit just feels like it’s prolonging the inevitable.

“It fails to give us the clarity and the security that we need. It brings back all the same worries and anxieties that millions of families have been experiencing in the run up to this announcement; and that we’ll have again when this extension comes to an end this winter.”

JRF Director Helen Barnard said: “It is unacceptable that the Chancellor has decided to cut the incomes of millions of families by £1040-a-year in six months’ time.

“He said this Budget would “meet the moment” but this decision creates a perfect storm for the end of this year, with the main rate of unemployment support cut to its lowest level in real terms since 1990 just as furlough ends and job losses are expected to peak.

“This makes no sense and will pull hundreds of thousands more people into poverty as we head into winter.

“Even before Coronavirus, incomes were falling fastest for people with the lowest incomes due in large part to benefit cuts.

“Ministers know this short extension offers little relief or reassurance to the millions of families, both in and out-of-work, for whom this £20-a-week is helping to stay afloat.

“This cut to Universal Credit will increase hardship when the economic crisis is far from over and undermine our national road to recovery.

“It is not too late for the Chancellor to do the right thing: announce an extension of the £20 uplift to Universal Credit for at least the next year.

“It is also totally indefensible that people who are sick, disabled or carers claiming legacy benefits continue to be excluded from this vital support. The Government must urgently right this injustice.”


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