Autumn Budget – keeping the £20 social security uplift is essential

The Joseph Rowntree Foundation (JRF) has recently produced analysis to show that the removal of the additional £20 per week uplift for those claiming Universal Credit and Tax Credits could have a devastating effect on low income families.

“The £20 per week uplift to Universal Credit and Working Tax Credit has been a lifeline for families during the coronavirus storm. But it is due to end in April 2021, whipping the lifeline away, cutting many adrift and seeing 700,000 more people pulled into poverty.”

Joseph Rowntree Foundation - Briefing: Autumn Budget - why we must keep the £20 social security lifeline 9 Sept 2020

The uplift was announced in March by the Chancellor Rishi Sunak as part of the COVID-19 Workers Support Package. It has the potential for low income, Universal Credit and Tax Credits claimants to be better off by £1040 over the 2020-2021 financial year.  It is due to run until April 2021.

The analysis by the JRF identifies the following risks, should the uplift be withdrawn:

  • 700,000 more people, including 300,000 more children, could move into poverty; and
  • 500,000 more people could end up in deep poverty (more than 50% below the poverty line)

The Foundation argues that should the uplift be discontinued then families experiencing job loss because of the pandemic will face difficult cuts to their incomes, especially when seen as a percentage of their previous earnings. For many the uplift has been a lifeline and allowed them to maintain an element of financial stability during the lockdown.

Indeed, the Office for Budget Responsibility (OBR) has predicted that up to one in eight workers could be out of a job by the end of 2020 and subsequent unemployment will likely remain high over the following years[1].

The government has already shown compassion by introducing this uplift at a difficult time and so strengthening the social security system when required for those most in need.

The JRF agrees that investment is needed in good jobs, employment support, skills, and infrastructure while at the same time supporting those in sectors where potential redundancies and job losses loom large. They also identify that this is a fine balance in line with public health, local lockdowns, and other constraints (e.g. public transport restrictions) that need to be maintained.

“The priority now is to protect people from being pulled deep into poverty.”

Mechanisms are required to keep families afloat via social security support, minimise the impact and damage of unemployment and income loss and to bolster services to assist in the securing of new jobs, reduction in debt and support health problems.

The Foundation are asking for the £20 uplift to be made a permanent addition to the standard allowance of Universal Credit and basic element of Working Tax Credit at a cost of £9bn. They also ask for it to be extended to those on ESA, Income Support and JSA.

By doing that it will ensure that the effects of the pandemic are not compounded by rising child poverty and that their future education and economic prospects are not negatively impacted.

[1] Office for Budget Responsibility (July 2020) Fiscal Sustainability Report - July 2020 [Online] Available

at: https://obr.uk/fsr/fiscal-sustainability-report-july-2020/

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