Rishi Sunak today confirmed he will cut Universal Credit in October despite pleas from charities, mental health campaigners and a mum who uses the benefit to buy her child’s clothes.
The Tory Chancellor said outright that he will not extend the £20-a-week uplift beyond the end of September despite fears of a “cliff-edge” for families.
The temporary boost to benefit rates, first implemented in April 2020 due to coronavirus, was extended in yesterday’s Budget by six months after it had been due to run out in the first two weeks of April.
Campaigners had called for Mr Sunak to go further. Some said the boost should be made permanent - to avoid benefits dropping back to their lowest level since the 1990s.
Cross-party MPs said an extension should last a year at least - and the Resolution Foundation warned the cut-off will cause a 7% fall in income for the poorest households.
But it is understood the Chancellor is firmly fixed on ending the uplift at the end of September - despite 6million people claiming UC, and furlough being due to end at the same time.
That is despite other schemes like the Stamp Duty cut being phased out in stages, and the government's own watchdog the OBR projecting up to 2million people will still be on furlough in September.
Asked today if he will extend it beyond another six months, Mr Sunak told BBC Breakfast: “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.”
Asked why he wasn't phasing out the £20, he argued "it's in place in full all the way through to the end of September" which is a "more generous" approach than what he could have done - cutting it partially from the summer.
The Chancellor was presented on BBC Breakfast with the case of Carly, who uses the £20 uplift to buy new clothes for her children as they grow.
He was told she had to stop working to look after her daughter with severe disabilities, and her husband is a low-earning delivery driver.
But asked if he would keep the uplift, Mr Sunak replied: “We are keeping it for another six months.”
He said an investment in the local housing allowance - a complex formula he claimed helps people with up to £600 in rent - will continue.
Charities and campaigners have already started a fresh push to make the extension of Universal Credit, which costs £2.2billion, permanent.
James Taylor of the charity Scope said: "A temporary extension isn't enough; another six months would mean the uplift ending just as unemployment is set to peak.
"This creates the very real risk of plunging many disabled people into poverty. Scope want to see this uplift made permanent, and extended to legacy benefits such as Employment and Support Allowance."
Mark Rowland, Chief Executive of the Mental Health Foundation said: “We welcome the Government’s decision to extend the Universal Credit uplift until the end of September, but are deeply concerned by the cliff-edge effect when this ends and the potential impact this will have on millions of people’s mental health."
Action for Children’s director of policy and campaigns, Imran Hussain, said: "It makes no sense to cut this lifeline in six months when the furlough scheme will have ended and unemployment is expected to be near its highest – exactly when families will need it most. Families need help and certainty, not a stay of execution.
“There’s no faster way to push more children into poverty than by snatching £20 a week out of the pockets of our country’s poorest families. Many of them are in work and doing their best to hold their heads above water after a traumatic year that’s seen hours cut and wage packets slashed."
Helen Barnard, Director of the Joseph Rowntree Foundation, said “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."
