Letter from Denise Craghill to The Rt Hon. Thérèse Coffey MP, Secretary of State for Work and Pensions about the “Universal Credit Uplift”:
Dear Secretary of State,
As Executive Member with responsibility for financial inclusion in York, I am writing to express my concern over the lack of clarity in Government’s plans regarding the £20 uplift in Universal Credit, which I would urge to be maintained after April 2021 and extended to legacy benefits, so that millions of families are not forced into poverty.
The changes in benefit policy, implemented in the early months of the crisis, including the £20 a week boost to tax credits and Universal Credit, have provided critical financial support for many families during the pandemic. However, as stated by the Chancellor previously, the economic emergency has only just begun. The economic impact of the pandemic is only just beginning and the number of people claiming Universal Credit has increased by 90% since March. It is clear that those on low incomes will continue facing significant challenges.
Therefore, it would be a mistake to undo the progress in strengthening our social security system. Such a decision would also damage our recovery. Ending the boost would mean withdrawing around £8 billion from disposable incomes in 2021-22, precisely from those groups that need it most to support spending and the economic recovery in 2021-22. Cutting support for those on the lowest incomes will reduce demand in the economy at a time when we are trying to promote recovery.
In York, we have seen a significant increase in Universal Credit claimants. The number of people receiving Universal Credit in York increasing from 6,535 in March to 10,330 in April. In response, the Council has invested to support those in hardship by increasing the existing emergency support funding (York Financial Assistance or YFAS scheme) to £1.2m, in order to assist those in need of financial assistance. Whilst the support provided by the Government, which has enabled the Council to distribute more than £100 million of financial grants, is welcome, it sadly does not go far enough to ensure that those on low incomes receive the support they need once the extra boost is withdrawn.
Analysis by the Joseph Rowntree Foundation shows that if the £20 uplift is not made permanent, 6.2 million families will see £1,040 a year cut to their incomes overnight and 500,000 people, including 200,000 children, are at risk of being swept into poverty.
Although, we welcome the commitment made by the Government to review the £20 uplift, we understand that implantation of such a change takes months for the Department for Work & Pensions to action for people on legacy benefits – Employment and Support Allowance, Jobseeker’s Allowance and Income Support.
A decision on the extension must be made as soon as possible, so this support could be in place by April. The fact that this relatively minimal boost has been so crucial to millions of families across the country, should be seen as a reflection of the fact that support was not adequate when we entered the crisis and certainly won’t be enough in future if the uplift is not at least maintained.
Major issues are still inherent in the Universal Credit system, most notably, people having to wait five weeks for their first payment and the ongoing delays in receiving support, leaving many reliant on food banks, falling seriously behind with their rent, and experiencing increased levels of psychological distress. Whilst securing the extension of the £20 boost will provide improved support, the Government should take the opportunity to improve all aspects of the working-age welfare system.
I would urge the Government to ease the uncertainty and recognise the urgency of this decision by making the £20 uplift to Universal Credit permanent and extend this same support to those on legacy benefits immediately.
Cllr Denise Craghill
Executive Member for Housing and Safer Communities City of York Council