Planning & Budgeting

Charities urge ministers to consider extending boost to Universal Credit

· 3 min read

Charities have urged ministers to extend the weekly uplift to universal credit that was introduced earlier this year to support struggling families during the coronavirus pandemic.

Charities have urged ministers to extend the weekly uplift to universal credit that was introduced earlier this year to support struggling families during the coronavirus pandemic.

Research carried out by the Legatum Institute shows that close to 700,000 people have been saved from falling into poverty thanks to the £20 per week boost to their universal credit payments. Although 700,000 people have already fallen into poverty during the pandemic, the Legatum Institute’s research indicates that this number may have been twice as high without the added weekly benefit.

The government has committed to keeping the £20 per week boost intact until the end of March 2021. However, all data indicate that the economic fallout of the pandemic will endure well into the new year, prompting campaigners to lobby the government to extend this support further. 

Claims to universal credit have been steadily increasing since March, in response to restrictions caused by the coronavirus pandemic. At the peak of the crisis, there were 3.7 million claims made to Universal Credit, representing more than a third of the total number of claims made to universal credit since its introduction in 2013.

The latest government data reveal that 5.7 million people in the UK made universal credit claims as of October 2020, which, while not as high as in the peak, is still up 2% from the previous month. The numbers indicate that for many, economic recovery is yet to become a reality. 

Specific sectors like hospitality have been hit hardest, with as much as 80% of the workforce having been furloughed or laid off. Job uncertainty still runs rampant, with businesses waiting to see what the impact of the most recent lockdown will be on their profitability.

Chancellor Rishi Sunak’s failure to mention any extension to the universal credit boost in his Spending Review last week has prompted reactions from several prominent charities as well as some Labour MPs. 

Labour's shadow work and pensions secretary, Jonathan Reynolds, urged the government consider extending the scheme as removing the uplift would mean cutting £1,000 a year from thousands of families’ income at the peak of the unemployment crisis. "This crisis has highlighted how important it is that we support each other but the Conservatives expect the poorest households to shoulder the burden," said Mr Reynolds.

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The boost to the universal credit scheme, while a welcome move, will still not be enough to save many families from falling into deeper debt. Research by the Joseph Rowntree Foundation indicates that household borrowing has increased dramatically over the past months, with around half of them falling behind on paying bills. Additionally, close to two-thirds of UK households have been unable to survive on Universal Credit alone, and have had to borrow money to stay afloat, putting them at the mercy of lenders.

Charities like the Legatum Foundation hope that in addition to extending the weekly boost, that the universal credit scheme at large will be reviewed to ensure that it fulfils its purpose and avoids pushing the vulnerable further into debt.

Rhea Tibrewala
Rhea Tibrewala
Rhea has had over 5 years of experience in the finance sector, having worked as a digital marketing manager for leading financial institutions across multiple geographies. She is a tech fanatic, an avid reader, and enjoys travelling and music in her free time.
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