UK ‘heading for biggest overnight social security cut since Second World War’

The UK is heading for the biggest overnight cut to the basic rate of social security since the foundation of the modern welfare state, the Joseph Rowntree Foundation (JRF) is warning.

As ministers and MPs go for their summer break, they should consider the impact of plans to cut Universal Credit by £20 a week in October, the foundation said.

The cut to the incomes of around six million families would be a huge shock, it added.

It warned that half a million more people are set to be pulled into poverty, including 200,000 children.

Working families make up the majority of families who will be affected by the cut to Universal Credit (UC) and Working Tax Credit (WTC), it said.

Families with children will be disproportionately impacted, the JRF argued. Around six in 10 of all single-parent families will experience their income falling by the equivalent of £1,040 per year because of the cut in UC or WTC.

And it said that despite a commitment to “levelling up”, the impact of the cut will be the greatest across the North of England, Wales, the West Midlands and Northern Ireland.

New analysis from JRF on the adequacy of working-age social security used scenarios to demonstrate how adequacy has changed for different households over time.

In its illustrative family scenario with three children, where one adult is working full-time, and the other is working part-time, living in Kernow West, a medium cost area, the family would have been £271 a month above the poverty line in 2013/14.

But cuts and freezes in the decade leading up to the pandemic eroded their income, so that even with the £20 increase in 2020, they are now below the poverty line, the foundation said.

It added that if the cut goes ahead, they would be £150 per month below the poverty line.

Katie Schmuecker, deputy director of policy and partnerships for the JRF, said: “Universal Credit has been a lifeline that has helped keep millions of heads above water, but the new analysis should act as a stark warning of the immense, immediate and avoidable consequences of what amounts to the biggest overnight cut to the basic rate of social security since the Second World War.

“We all accept governing is about priorities but cutting the incomes of millions of the poorest families and sucking money out of the places in which they live flies in the face of the Government’s mission to level up our country.

“This is not about generosity, it’s a matter of investing in families so they have the dignity of being able to meet their needs and supporting everyone in and out of work to escape poverty.

“The public deserve to know what the Government expects the impact of this cut to be. Ministers cannot hide the fact that they are ploughing ahead with a cut despite knowing it will be devastating for millions of families.

“They should publish their analysis on the impact of the cut as soon as possible.”

The TUC said that even in wealthier parts of the UK, Universal Credit cuts will impact heavily on low-paid workers.

In Chancellor Rishi Sunak’s constituency (Richmond in North Yorkshire) nearly half (48%) of people receiving Universal Credit are in work and in Prime Minister Boris Johnson’s constituency (Uxbridge and South Ruislip in London) around two-fifths (38%) of Universal Credit recipients are in work, the TUC said.

TUC general secretary Frances O’Grady said: “Everyone should have enough money to live on.

“But if the Universal credit cut goes ahead, millions of working families – and key workers – will be forced to get by on much less every week. It is levelling down – not levelling up.

“Ministers should abandon this cruel cut that will hit low-income working families. We need a social security system that helps people get back on their feet – not one that locks them in poverty.

“And we need decent jobs on decent pay for every worker, in every part of the country.

“That means increasing the minimum wage, investing to create good green jobs and tackling the scourge of insecure work. Cutting Universal Credit isn’t the way to achieve decent work.”

A Government spokesperson said: “Universal Credit has provided a vital safety net for six million people during the pandemic, and we announced the temporary uplift as part of a £400 billion package of measures put in place that will last well beyond the end of the road map.

“Our focus now is on our multibillion-pound Plan for Jobs, which will support people in the long term by helping them learn new skills and increase their hours or find new work.”

Here is the TUC’s analysis of the percentages of Universal Credit recipients who are in work across Britain:

– North East, 35.6%

– North West, 37.3%

– Yorkshire and the Humber, 37.5%

– East Midlands, 41.2%

– West Midlands, 36.7%

– East of England, 40.4%

– London, 37.0%

– South East, 40.5%

– South West, 42.1%

– Wales, 37.1%

– Scotland, 36.8%