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Keep and extend the £20 week Universal Credit uplift or otherwise push up poverty, says the Resolution Foundation

18 January 2021

The Government’s decision on whether to keep the uplift to Universal Credit (UC) won’t just determine whether millions of households are able to enjoy a living standards recovery this year.

It could also determine whether the inequality story of the whole parliament is one of ‘levelling up’ living standards or pushing up poverty, says a new research report published today by the Resolution Foundation.

The Resolution Foundation is an independent think-tank focused on improving the living standards of those on low-to-middle incomes.

In ‘Living Standards Outlook 2021’, the think tank says that Benefit policy has done a great deal to support incomes in 2020-21, through policies like suspending the Minimum Income Floor, a £20 a week increase to UC and Working Tax Credit, and additional help for renters through the increase in Local Housing Allowance (LHA) rates to the 30th percentile of local rents.

The think tank says that different benefit changes such as the £20 week UC uplift, the suspension of the Minimum Income Floor and the increase to Local Housing Allowance however done a great deal to support incomes in 2020-21.

However, it stresses that:

“The most significant of these was the £20 a week boost, costing an estimated £6.1bn in 2020-21. But, having been increased from £73 per week to £94 per week, the basic level of support for a single out-of-work adult (aged over 24) is now set to fall back to around £75 in April 2021, an estimated 22 per cent cut in real terms. Such a reversion to pre-coronavirus levels would mean a return to the lowest price-adjusted generosity since 1990-91.

We estimate that 6 million households (22 per cent) – containing 18 million people (27 per cent) – will lose over £1,000 in 2021-22. That is a big cash loss for millions of families: … the bottom quintile of the distribution (excluding the poorest twentieth of the population) is set to experience a 4 per cent fall in incomes.

Together with the reintroduction of the minimum income floor (due to return in April 2021), and the ending of the additional support provided to local authorities in England to help boost council tax support schemes, this represents a very large reduction in incomes for UC and tax credit recipients in 2021-22.

And it should be seen in the context of other cuts that are ongoing and will put further pressure on working-age incomes over the coming years: chiefly the continued roll-out of the ‘two child limit’ and the abolition of the family element in UC and other means-tested support.

This is why we have previously called for the £20 a week boost to be made permanent, as well as extended to recipients of the so-called legacy benefits, and with an associated change made to the benefit cap so that families affected by it feel the £20 a week uplift in full.”

Ken Butler DR UK’s Welfare Rights and Policy Adviser says:

The Resolution Foundation has now joined an ever growing body of organisations pressing the Government hard to keep and extend the UC £20 week uplift.

By restricting the £20 per week increase only to Universal Credit the Government has discriminated against the millions of disabled people on other benefits. Even before the Covid-19 crisis, benefit cuts and austerity hit disabled people the hardest.

The question a responsible Government should consider is: are those on UC, ESA, JSA and income support still facing significant extra costs due to the pandemic?

The answer is clearly yes - so the £20 UC uplift mist be kept and extended to those on ESA and other legacy benefits”.  

The Living Standards Outlook 2021 is available from resolutionfoundation.org

See also the Joseph Rowntree Foundation briefing The financial impact of COVID-19 on disabled people and their carers is available from jrf.org.uk.