On 9 September 2021, the House of Lords will debate the following:

Baroness Tyler of Enfield (Liberal Democrat) to ask Her Majesty’s Government what impact assessment they have made of the proposed withdrawal of the £20 uplift to Universal Credit.

Universal credit

The Welfare Reform Act 2012 introduced a system of universal credit (UC) to replace six ‘legacy benefits’. The aim of the change was to streamline and simplify the benefits system for both benefits claimants and those administering the system. The then Coalition Government also argued that the scheme would encourage people on benefits to start work and would reduce fraud and error.

In August 2021, the Government published its most recent quarterly bulletin providing data and commentary about UC. It reported that 5 million households were claiming it in May 2021. It also provided the following statistics:

  • 42,000 claims were made to UC per week in the four weeks to 8 July 2021;
  • there were 130,000 starts on UC in the four weeks to 8 July 2021;
  • 9 million people were on UC at 8 July 2021, down 34,000 from April 2021;
  • 2 million households received a payment in May 2021, down 130,000 from February 2021; and
  • 89% of new claims and 97% of all claims received their payment in full and on time for the assessment period covering 8 April 2021, compared with 89% and 97% respectively in January 2021.

Universal credit and the Covid-19 pandemic

An uplift

On 20 March 2020, the Chancellor the Exchequer, Rishi Sunak, announced that the standard allowances of UC and the basic element of working tax credit would be increased by £1,000 a year, or £20 a week. He said that this uplift was designed to “strengthen the safety net” during the Covid-19 pandemic and was part of a wider support package for household finances.

In November 2020, the Legatum Institute reported that although poverty had risen because of the Covid-19 pandemic, government policy—including the uplift to UC and working tax credits—“has insulated many families” from it. It estimated that the policies had protected 690,000 people from poverty in winter 2020. It also reported that some groups had seen a fall in poverty. For example, it found a reduction of 100,000 in poverty amongst people living in lone-parent families and a reduction of 170,000 amongst people in workless families. However, it also reported that there have been “significant increases in poverty amongst people living in families that were working prior to the Covid-19 crises”.

The uplift was initially intended to last 12 months and was due to expire in April 2021. However, in the March 2021 budget, the Government announced that it would be extended for a further six months. It also said that it would make a one-off payment of £500 to eligible working tax credit recipients.

Restrictions lifting

In July 2021, the Government confirmed that it would withdraw the uplift at the end of September 2021 as planned. Giving evidence to the House of Commons Work and Pensions Committee on 7 July 2021, Thérèse Coffey, Secretary of State for Work and Pensions, said that the uplift was being “phased out, in line with all the other temporary measures that are also being removed”. The same day, Prime Minister Boris Johnson was questioned on the issue by the House of Commons Liaison Committee. Responding, he said that as Covid-19 restrictions eased, the emphasis “has got to be on getting people in work and getting people into jobs, and that is what we are doing”.

A number of individuals and organisations have raised concerns about the plans and called for the uplift to be made permanent. For example:

Responding to some of the criticisms, a Treasury spokesperson told the Times:

Throughout this crisis, the Government has spent £400 billion protecting people’s jobs, livelihoods and supporting businesses and public services. We went long and extended economic support well beyond the end of the road map, right through to the end of September. That includes unprecedented welfare support.

More than £9 billon will have been spent on the uplift by the time it ends in September. It is right that economic support is wound down as we come out of this crisis and we focus on helping people back into work. We have purposely provided a three-month cushion once restrictions are lifted in order to support those who most need it.

YouGov polling has shown that the public is divided on the issue: 38% said they supported the uplift being ended while 39% were opposed. YouGov also noted that public opinion falls along party lines, with two-thirds of Conservative voters (63%) in favour of ending the £20 uplift and a similar amount of Labour voters (61%) against it.

Impact assessments

There have been calls for the Government to publish any impact assessment or analysis it has done on withdrawing the uplift. Katie Schmuecker, deputy director of policy and partnerships for the Joseph Rowntree Foundation, has called on the Government to “publish their analysis on the impact of the cut as soon as possible”.

In response to a written question on 22 July 2021, which asked the Government if it would publish the impact assessment for the removal of the uplift, Will Quince, Minister for Welfare Delivery, said “no assessment has been made”.

The Poverty Alliance submitted a freedom of information request asking the Government to disclose any analysis that it had undertaken. However, it said that the Department for Work and Pensions responded to the request saying that it did not deem disclosure of the information to be in the public interest.

Several organisations have produced their own analysis of the potential impact. Referring to the plans as “the biggest overnight cut to the basic rate of social security since the foundation of the modern welfare state”, the Joseph Rowntree Foundation (JRF) outlined five facts “about the impact of this cut” that it asked the Government and MPs to consider:

  • half a million more people are set to be pulled into poverty, including 200,000 children;
  • working families make up the majority of families who will be affected by the cut;
  • families with children will be disproportionately impacted; and
  • the impact of the cut will be the greatest across the North of England, Wales, the West Midlands and Northern Ireland.

The JRF also conducted an analysis of the number and proportion of families who will be affected by the decision for each UK parliamentary consistency. It reported that 140 constituencies would see more than one in four of all families (with or without children) affected, including 36 Conservative seats. It also said:

Our analysis has shown that 6 million low-income families will lose £1,040 from their annual income, creating serious financial hardship and leave 500,000 people to be swept into poverty—including 200,000 children. Families with children will be disproportionately impacted and, worryingly, 6-in-10 of all single-parent families in the UK will be impacted.

Citizens Advice has also published analysis of the policy. In August 2021, it estimated that the removal of the uplift will “hit nearly six million people”, with more than a third (38%) of those affected already in employment and one-in-six (16%) under 25. It also reported that roughly 1.9 million families with children will see their benefits cut and that London and the North East will be the regions with the biggest proportion of residents impacted.

Writing for Politics Home, Dame Clare Moriarty, chief executive of Citizens Advice, highlighted that people are one and a half times more likely to claim UC in places the Government has said it wants to invest in, including those communities prioritised by its levelling up fund. She said that for each £1 of investment from the levelling up fund, £1.80 would be taken from the local economy through the cut to UC.

The Trussell Trust has also published research on the matter, which was undertaken by YouGov. It found that without the uplift people said they would have to go without essentials or be forced into debt to cover the costs.

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Cover image by stux from Pixabay.