The Guardian view on universal credit: the penny-pinchers are wrong
An argument around the cabinet table in the spring ended in compromise: the £20 a week added to universal credit at the start of the pandemic would neither be withdrawn nor made permanent. It would be extended until September. With just two weeks to go until the end of the parliamentary session, time is running out for the chancellor, Rishi Sunak, to remove the threat hanging over 5.6 million claimants: after the summer they will be more than £80 a month poorer.
Six former work and pensions secretaries including Amber Rudd and Sir Iain Duncan Smith wrote to Mr Sunak at the weekend, arguing for the uplift to be retained. This also reflects the view of the current incumbent, Thérèse Coffey, and the Tory peer who helped design universal credit, Lord Freud. But so far the Treasury appears determined to rebuff all advances and stick to its callous claim that reducing weekly payments to £74.59 will contribute to getting people “back into work”.
The reality is far less palatable than this fiction. Millions of people have been plunged into extreme hardship by the pandemic: to be eligible for universal credit in the first place, claimants must have savings of less than £16,000. Many have nothing to fall back on at all. Demand for food aid has hit unprecedented highs, with 2.5m parcels handed out by the Trussell Trust, the UK’s largest food bank charity, during the pandemic’s first year. Families with children relying on benefits to pay their rent, energy and supermarket bills are also those hit hardest by school closures. Pupils with fewer resources of every kind outside school are known to be among the past year’s biggest losers, with an educational deficit that may never be made up, particularly given the government’s refusal to fund an adequate catch-up package.
The chancellor’s instincts, and those of his department, are wrong.
Having spent £22bn on a test-and-trace programme that did not meet its targets, it is irrational and mean-spirited to refuse to stump up the £6bn a year that the £20 uplift is estimated to cost. Poverty is bad for people, making them ill and unhappy. A widening gap in the obesity rates between poorer and richer people, revealed in research from the King’s Fund, is just the latest example of a deepening divide in experiences and opportunities that is the mark of an unjust society. New polling carried out for the Centre for Policy Studies shows that people believe politicians do not understand the economic pressures they face.
The prospect of a cut in universal credit is not the only danger. A reduction of £40m in the budget for discretionary housing payments, awarded to struggling tenants by councils but funded by central government, is expected to drive up evictions and homelessness. The benefit cap, including the two-child limit, leaves larger families with no means to bridge the gap between income and costs. Last year, the number of households affected by the cap jumped by 100,000.
The £20 increase wasn’t a cureall and still isn’t. Around two million people who have yet to move across to the new system did not benefit from it. But even rightwing thinktanks believe that cutting payments now is the wrong move. Mr Sunak should listen to the welfare experts and ignore the hardliners in the Treasury and at the cabinet table. If he will not, the prime minister must overrule him.