7th September 2021 – £20 weekly cut

Evidence Session of the impact of the £20 cut to Universal Credit and long covid

Report from Informal meeting on 7^th September 2021

OVERVIEW

The APPG on Universal Credit (UC) is a cross-party group, which was established in order for Members of Parliament and Peers of all parties to be able to come together to discuss their experiences of UC and those of their constituents, to receive advice and support from various agencies, to share best practice at supporting claimants and monitor this critical policy as it is rolled out.

The APPG accepts the core aims of UC in simplifying the benefits system and making it easier for people to move into work. The reality of UC, however, does not live up to these good intentions. We are seriously concerned that the design of UC does not sufficiently take into consideration the specific needs of the poorest working age people in the UK, that it fails to provide many of households with sufficient income to get by and that in its current form, UC does not work in their best interest. When this is coupled with the cuts to UC, for example, from the work allowances, taper rate and disability premiums, evidence indicates that some groups of claimants, including disabled people and single parents, are worse off than under the legacy system.

On 9^th June, the APPG held a virtual evidence session on the impact of the £20 weekly cut to Universal Credit, hearing evidence from: Trussell Trust, Joseph Rowntree Foundation, Citizens Advice, covid:aid, Women’s Support Network plus people claiming Universal Credit.

Of the 63 attendees, the following parliamentarians were registered: Claire Hanna MP, Kim Leadbeater MP, Anne McLaughlin MP, Ruth Cadbury MP, Baroness Mary Watkins, Marion Fellows MP, Baroness Ruth Lister, Sharon Hodgson MP, Tommy Sheppard MP, Marsha De Cordova MP, Stuart McDonald MP, Lord Davies of Brixton, Amy Callaghan MP, Carla Lockhart MP, Lord John Hendy, Lord George Young, Mary Foy MP, Douglas Chapman MP, Neale Hanvey MP.

SPEAKERS

Joseph Rowntree Foundation

About

JRF is an independent social change organisation, working to solve UK poverty. Through research, policy, collaboration and practical solutions, JRF aims to inspire action and change that will create a prosperous UK without poverty. JRF is responsible for creating and coordinating the ‘Keep the Lifeline’ campaign, which calls on the government to keep – not cut- the life of £20 a week in Universal Credit (UC) and Working Tax Credit (WTC) this October, and to extend this support to people receiving legacy benefits.

Key findings

• On the 6^th of October the government is set to make the biggest cut to our social security rate since World War Two. This will take the main security rate of out of work support down to its lowest level in real terms since around 1990 and its lowest ever as a proportion of average wages.
• We entered the pandemic with a social security system that wasn’t providing adequate support to keep families out of poverty, the government’s decision to uplift UC and WTC was an admission of this.
• Despite rising employment and rising living wage,
• In-work poverty was rising going into the pandemic and that was in part due to the erosion of social security support.
• On the 1^st of September, wrote to the PM with 100 other organisations urging not to cut UC – largest coalition on the issue.

Those affected by the cut

• Although low income families were seeing the fastest growth in earnings, they were seeing lower growth in income compared to the average family. Meaning those on the lowest incomes were the least likely to benefit from economic recovery and we are at risk of this happening again if the cut goes ahead, which puts the government’s commitment to levelling up low income areas into question.
• JRF analysis shows that the cut will effect 5.5 million families, both those in and out of work. Families with children will be disproportionately affected, including 6/10 of all single parent families in the UK.
• Most people on UC have only known UC at the current level, this will be a huge shock to those who have only started claiming UC since the pandemic hit.
• A common misconception is that there is a binary divide between those in work and not on benefits, and those out of work and on benefits. The reality is, many people affected by the cut will be in work. It is also important to not lose sight of the fact that many of the people affected cannot and are not expected to work due to UC rules, through disability, illness or caring commitments.
• 65% of those affected will be working families or the most vulnerable members of  our society who are not expected to work.
• Removing financial support from families and individuals makes it harder to seek work or move up the salary, to upskill and train. It risks spiralling debt and worsened physical and mental health.
• The DWP has not published its assessment of the £20 uplift, therefore JRF has produced independent analysis. It will impact 5.5 million households and will risk plunging 500,000 into poverty, including 200,000 children.
• Six previous Work and Pensions Secretaries have said the cuts in social security spending have gone too far and oppose this cut also. The government’s own MPs are warning that it will have deep and far effects in their own constituencies.
• Analysis of number and proportion of families who will be impacted by the cut to UC and WTC in each UK parliamentary constituency. 140 of constituencies would see more than a quarter of all families (including those without families) impacted, including 36 conservative seats. 413 will see more than a third of working age families with children hit, of these 191 are conservative and 53 were newly won at the last election or subsequent bi-elections. Cutting UC and WTC undermines the governments levelling up agenda.

Adequacy of social security

• In July carried out analysis of adequacy of social security system. It found that on all fronts, the UK system was failing to prevent families from poverty, with large proportions of on income related benefits were behind on bills and experiencing food insecurity.
• If the cut is to go ahead, all illustrated family types would end up below the poverty line – including a two parent family with both parents working.
• A significant concern is single people who have lost their job, who would experience an income equivalent of just 26% of their previous in-work income before the pandemic, even if they were previously on National Minimum Wage. This would put them below the destitution line.

Recommendations

• To make the £20 increase to Universal Credit permanent.
• To improve living standards, must improve job security and financial security to give people the best opportunities possible. The focus should be on secure jobs that pay enough to live on, improving transport links, supporting with childcare costs, training and skills to get people back into employment rather than reducing social security.

Citizens Advice

About

Citizens Advice is a network of independent charities that  offer confidential and independent advice online, over the phone, and in person, for free. They carry out extensive welfare policy research, with a large focus upon Universal Credit. Since the start of the pandemic their 270 local offices have helped over 500,000 people with issues relating to Universal Credit.

Levelling Up

• The Government has made it clear that levelling up is high on their policy agenda. The Treasury’s plan for growth states it’s number one mission is to level up the country, to raise living standards by tackling geographic disparities and supporting struggling towns.
• Central to the Government’s delivery of this vision is the Levelling Up Fund – a £4.8 billion pot of investment for local infrastructure, building transport links and urban regeneration over the next 4 years.
• This fund gives some insight into the areas the Government is putting at the heart of this agenda.
• The Government has created an index to determine where in the country to prioritise. The index places each local authority in the United Kingdom into one of three categories – from highest to lowest – according to their need for investment to level up. The ranking system looks at the need for economic growth, for more transport links and for investment in high-streets and town centres.

Universal Credit is fundamental to supporting living standards 

• Looking at areas the government says are most in need, it’s clear that Universal Credit supports the living standards of so many families – both in and out of work. Places like Blackpool where over 1 in 4 (27%) working-age people currently rely on Universal Credit, and over 1 in 3 of those people are in work.
• Overall, working age adults are over one and half times more likely to claim Universal Credit in these towns and cities, compared to those in lower priority areas. This means that cutting Universal Credit will hit communities the Government has prioritised for levelling up the hardest.
• In total, these areas stand to lose almost twice as much money from their local economies as lower priority areas. This risks widening the living standards gap across the country, and undermining the goal of levelling up.
• Through the levelling up fund, the Government has committed to investing in places they say have been left behind. But cutting Universal Credit risks giving with one hand while taking with the other.
• Going ahead with the cut means that if every penny of England’s £4 billion levelling up fund went to the areas the government says are most in need, they would still be out of pocket. For every £1 investment from the Levelling Up Fund, £1.80 would be taken from the local economy through the cut to Universal Credit.
• And this could have negative knock on effects in these areas. We know people at the lower end of the income distribution are more likely to spend their income on essentials, rather than save – in local food shops and on travel, for instance. Many areas that are already struggling face having millions of pounds of spending power withdrawn from their local economies overnight.
• Residents in places that are successful in securing investment from the levelling up fund will likely have to wait years to see the benefits of large infrastructure projects. A cut of up to 25% of someone’s monthly income, however, would be felt instantly.
• If the cut went ahead, our research shows that up to 2.3 million people claiming Universal Credit could be pushed into the red overnight. It’s clear that cutting Universal Credit would leave individuals facing difficult decisions between heating and eating, and would hurt local economies.

Recommendations

• This analysis shows that cutting Universal Credit would also seriously undermine the levelling up agenda – changing course must be the Government’s next step towards delivering on their promise to level up.

Trussell Trust

About

The Trussell Trust is an anti-poverty charity supporting a network of more than 1,300 food bank centres across the UK. Last year the Trussell Trust launched its new organisational strategy to end the need for food banks across the UK.

Key findings

Current picture of need

The need for foodbanks is at a record high, with dramatic year on year increases even prior to the pandemic (where an increase of 38% was experienced). Since 2015 there has been a 128% rise in demand for food banks. Even controlling for new foodbanks, there is a clear indicator of increasing demand and need. Going back to a pre-pandemic level is unacceptable.

The link to UC being that 86% of households were in receipt of social security, with just 16% having someone working. Therefore, a vast majority will be in receipt of UC. UC is significant in supporting people who are using foodbanks or in need of using foodbanks.

Trussell Trust survey shows that a large majority (77%) of people currently claiming Universal Credit are already struggling to keep up with bills and credit commitments – the equivalent of 4.7 million people.

This survey also showed 1.9m people on UC had at least one day in the previous month where they didn’t eat at all, or only had one meal, because they couldn’t afford to buy enough food.

The impact of the cut

Food bank managers

Foodbank managers were asked ‘With the £20 increase due to end from October 2021, how concerned, if at all, are you about the impact this will have on the number of people referred to the food bank that you run’, 89% were very or fairly concerned.

Foodbank managers were asked ‘With the £20 increase due to end from October 2021, how concerned, if at all, are you about the impact this will have on the lives of people and households referred to the food bank that you run’, 97% were very or fairly concerned.

Individuals

• Need to use a food bank: 15% (over 900k) say they will ‘very likely’ need to use a food bank.
• Make every day a struggle: 23% (1.3m) people say it will make every day a struggle.
• Get to work: 15% (over 900k) people say they ‘very likely wouldn’t have enough money to travel to work or to essential appointments on public transport if Universal Credit is cut’.
• The survey shows that the North East will be the most severely affected region.
• UC claimants here are a third more likely than the UK average to say they will need to use a food bank as a result of this cut (20% vs 15%).
• UC claimants in NE also significantly more likely than UK average to skip meals or not be able to keep the heating on.
• This cut will damage spending in the local economies most in need of investment.

Recommendations

• Keeping the £20 increase would be a vital first step in creating a benefits system which gives everyone enough to pay for the essentials.
• The State of Hunger report found that a £1 increase in the real weekly value of main out-of-work benefits in 2018 would result in 84 fewer food parcels per year in a typical local authority.
• But the government must also extend the uplift to people on legacy benefits. Last summer a third (32%) of households needing to use a food bank and receiving social security were claiming legacy benefits.

covid:aid

About

covid:aid is the first UK charity dedicated to helping all those adversely affected by the COVID-19 pandemic. They support and work with existing services provided by other sectors and groups to identify the gaps where people may need support.

Key findings

• Long Covid is an illness defined by unpredictability – those living with Long Covid don’t know what the future holds and can struggle to plan ahead. Therefore the prospect of needing to make mandatory meetings with a threat of sanction while ill, or needing to fill out forms to make a claim as soon as possible despite suffering ‘brain fog’ (severe cognitive issues) – while struggling financially – can itself be incredibly stressful and potentially trigger relapses.
• From their survey of 25 people with Long Covid, a majority of 56% began claiming Universal Credit after contracting Covid-19, while 20% were already on Universal Credit
• The experience of living with Long Covid and claiming Universal Credit can be challenging – respondents had to dip into savings and in some cases could not afford to eat
• For some the £20 uplift made a substantial difference: “As a full-time carer the extra £20 has been a big improvement. Without it the choices are better food or heating”

Uplift anxiety

• 100% of respondents were concerned about the planned removal of the £20 uplift:
  • Respondents said that they were already struggling with bills, and did not know how they would be able to adjust to the reduction in income
  • One person said: “I know it’s only £20 but that’s a food shop for some people.”
  • And as another put it: “I am already eating from a foodbank and can’t afford to pay my bills: it is not possible for me to make other cuts.”

Work coaches

• 40% had experience of dealing with work coaches. Responses often indicated that coaches lacked an awareness around long covid.
• One respondent said that they were made to “attend a meeting at the top of two flights of stairs”, something which could leave them exhausted and potentially trigger a relapse.
• “Despite the understanding of the person I spoke to, there was nothing at all on the system that could be done to stop sanctions if I missed the next appointment”.

System Stresses

• Some respondents had been threatened with sanctions due to automated processes which did not accommodate the shifting nature of Long Covid, where debilitating relapses can occur unexpectedly following periods of wellness.
• Due to cognitive difficulties – ’brain fog’ is a common symptom of Long Covid’– filling out forms and speaking at meetings can itself be exhausting and energy-sapping experiences which risk triggering relapses.

Recommendations

• Work Coaches and those involved in administering Universal Credit should be provided with extra information/training to ensure awareness of Long Covid –and to better understand how those living with Long Covid should be treated.
• “Automated processes (such as for scheduling meetings and imposing sanctions) should be adjusted to accommodate for those with Long Covid whose symptoms are unpredictable, with relapses meaning the ability to attend meetings can change at short notice.
• The process for claiming Universal Credit – including form-filling – needs to be reflective of the cognitive difficulties (such as brain fog) that those living with Long Covid can commonly experience.
• Given that many of those began claiming Universal Credit after developing Long Covid are reliant on the £20 uplift to pay for bills and food, this should be retained or an alternate process substituted which will present these claimants sinking into increased debt – something likely to increase stress which can in turn exacerbate symptoms and lead to a spiral.

Women’s Support Network

About

WSN is a feminist organisation that provides support and services to women’s centres and groups and it currently supports fourteen women’s centres / groups across Northern Ireland. WSN is part of the Women’s Regional Consortium which consists of seven established women’s sector organisations. These organisations are committed to working in partnership with each other, government, statutory organisations and women’s organisations, centres and groups in disadvantaged and rural areas, to ensure that organisations working for women are given the best possible support in the work they do in tackling disadvantage and social exclusion.

UC in the context of Northern Ireland

• Latest figures show NI has just over 134,070 UC claimants (May 21) and lone parents (the majority of which are female) accounted for 32% (33,290) of payments. 
• We have larger family sizes here with twice as many large poor families as Scotland and the South East – these families are more affected by cuts to benefits and other welfare reform policies such as the two-child limit (Institute for Fiscal Studies Research 2017).
• NI also has differing childcare support putting parents here under even more financial pressure – we do not have access to the 30 hours free childcare available in England. 
• Families in NI can expect to pay a greater proportion of their incomes on childcare than households across the UK.  The last CEDAW report to the UK specifically raised the issue of childcare noting “that childcare costs remain excessive, particularly in Northern Ireland, which constitutes an obstacle for women to enter and progress in the workplace.”
• In NI 10% of children were defined as living in a food insecure household which doubles to around 20% in impoverished households (Family Resources Survey).
• A decade of austerity has had a real impact on women here as has been the case in other regions. Local analysis carried out by the NIHRC[1] showed that across most income levels the overall cash impact of welfare reform was more negative for women than men especially for lone parents who lose the equivalent of almost 10% of their net income.  Women have disproportionately shouldered the burden for the recession and they must not be allowed to do so again.
• In Northern Ireland a package of mitigation measures was agreed by the NI Executive to protect some claimants from the harshest impacts of welfare reform.  This included some mitigations for UC, while we very much welcome these an Audit Office report shows that uptake was below estimates.  In fact one of the mitigations (Cost of Work Allowance) was to include a special weighting for lone parents taking into account the cost of childcare was never implemented at all (25% of underspend).
• This is all relevant because women often act as the “shock absorbers” of poverty in households managing budgets to shield their children from the effects of poverty.  They often go without food, clothes and warmth in order to meet the needs of other family members when money is tight and this is very much reflected across all our research.  As one woman said “as long as my 2 kids are fed and watered I don’t care if I eat.” 
• Many women will have difficulty increasing their incomes through paid work unless they are helped with the costs of childcare and transport.

Key findings

• Research by WRC into UC painted an overwhelmingly negative picture of life for women on UC fraught with financial insecurity, worry, debt and in some cases cold and hunger.
• 39% said they felt they were worse off on UC than their previous benefits.
• 86% had not heard about the help available through the Contingency Fund which is a NI mitigation for UC.
• Many reported feeling the amount they received on UC was inadequate to live on forcing them to go to foodbanks or get into debt.
• One of the key recommendations from this research was to make the increase to UC/Tax Credits permanent to protect claimants from poverty and ensure they can meet basic living expenses.
• £20/week doesn’t sound like much but it is a significant amount of money to those on the lowest incomes.  Women we spoke to about this have said things like “it just means that I can live, it means that I can eat and have a roof over my head, it keeps my head above water, it’s a big amount to me and it would be a big amount to lose”.
• It makes a real difference in these households – allowing them to heat their homes, put food on the table, afford to buy things like fruit/veg, new school shoes/winter coats/children’s clothes, petrol for a car, etc.
• All this at a time when electricity bills have risen here around 10% and the biggest supplier of natural gas has just announced an almost 22% increase in natural gas prices.
• This cut would increase child poverty, damage economic growth and intensify regional inequality with NI likely to fare worse:
  • Resolution Foundation research  shows the cut would hit 36% of non-pensioner households in NI (the highest of all the UK regions – 35% in Wales, 34% in the North East, 31% in the North West compared to 21% in the South East) reflecting the underlying population and number of families with children.
    • Research by the Save the Children in NI  shows that maintaining the £20 would lift 11,000 children in NI out of poverty and reduce poverty by 2.5 percentage points, one of the largest declines in a decade.

Recommendations

• Making the £20 per week increase permanent and extending it to legacy benefits was a key recommendation not only from our own research but from the recently relaunched Feminist Recovery Plan for NI  and from the Government-appointed Expert Advisory Panels for an Anti-Poverty Strategy  and a Gender Equality Strategy.
• The benefits system must provide a proper safety net for people and families.  Without this more families and children will be pushed into financial hardship and poverty which has long-term negative impacts for both their physical and mental health and for society as a whole.
• It is morally and economically the right thing to do investing in the wellbeing of people, communities and future generations – showing the Govt is committed to not only building back better but building back fairer.

Community Advice Antrim & Newtownabbey

About

Community Advice Antrim & Newtownabbey (formerly known as Citizens Advice) has been meeting the needs of our community by providing free, independent and quality advice to local people since 1966. CAAN was established by the community to serve the community; they pride themselves in Putting People First.

Frontline Adviser account of the impact of the £20 cut

“As frontline advisors we see, on a daily basis, the fear and helplessness claimants face when they are told about the looming £20 per week cut to their Universal Credit.

In a borough of 140,000 people, in the past year, we have had about 10,000 queries on Universal Credit. We have helped almost 900 families with their heating, electricity, food and household items. The demand on help available through our partnerships – like Save the Children, local food banks, local uniform schemes have seen a sharp increase.

In the last year alone, crisis intervention – help provided for clients with basic living needs-which could not be met by UC – went up by 61%.

This includes clients who have moved to UC via Natural migration and have already lost the transitional protection they would have received if they transferred via managed migration. A number of our clients have inappropriately moved to UC due to either not fully understanding the circumstances or misinformation. These clients are already suffering due to reduced income. This £20 cut to UC now will be akin to kicking someone who is already down.

It is an established fact that NI has higher levels of poverty and  to add to our woes the cost of daily essentials is higher as well. In our borough, we have a large number of clients who are part time workers and hence their earnings are lower. These clients can only work part time due to either caring responsibilities or their health problems. They rely on UC to help meet their daily needs. They take pride in the fact that they are able to provide for their families. Not everyone is ready to ask for help or accept charitable donations and this £20 cut will mean clients having to decide whether to go hungry or be without heating/electricity!”

Client experiences

1. A single parent with two children. She lost her job at the beginning of the pandemic and claimed UC. Her benefits just about cover her bills each month. When discussing the £20 cut, the client stated she was afraid for the future. This cut couldn’t come at a worst time as the children are starting back to school she has to budget for extra’s each month like milk money, school fund, stationeries etc. The extra £20 per week in her UC covers her electric every week. She budgets and cuts corners where she can and stated that she does not know where else she could cut her budget when her UC reduces because of the £20/week cut.
2. a young couple who claim UC. The wife has health problems, she had to shield for better part of last year and even now is apprehensive about going out. Husband works part time as he is a carer for his wife. They receive a small amount of UC, which helps cover their gas, electric and travel expenses in getting to work. If the £20 is cut they will receive little to no help from UC and they have no way of supplementing this loss in income. He will be forced to choose between providing necessary care for his wife and increasing his working hours at the expense of compromising on his wife’s care.
3. a 23 year old client who lives alone in a private rented house. He lost his job during the pandemic. As he is a private tenant, his help with rent is restricted by the Local Housing Allowance and he has to meet the shortfall. So after paying his rent all he is left to live with is £36 per week – that is at the current rate. If £20 of that is reduced he will be left with £16 per week to live on – this £16 will be to cover his food, electricity, heating, expenses associated with searching for a job and to have a basic phone. How can anybody be expected to survive with £16 a week? Being out of work and having financial difficulty has had a massive effect on his mental health. He has had to seek professional help for his mental health problems. He has had to rely on friends and family to help out most months with the rent. Taking away the £20 from his already small amount of UC will only make things worse. He says he doesn’t know how he will survive, if this £20 cut goes ahead.

Lived experience speaker

• Karen is in receipt of UC, following a being in a car crash which left her unable to work. The £20 has been a real lifeline to her. After rent, she really struggles to afford the essentials such as direct debit payments for bills. She lives rurally, meaning she needs a car to be able to get out. She also has to get oil delivered because of living rurally, with a payment at the end of the financial year, otherwise she will not receive a delivery. She is 63 years old, and should have been receiving her pension, and didn’t know she wouldn’t be, which has left her in an unforeseen predicament.
• “When I knew the £20 was going to be taken away, I’d looked around my house to see what I could sell. Both my parents have passed away now, and when I first lost my job I had to sell jewellery that was my late mothers, that she had handed down to me to give on to my children when I pass away. I have had to sell it all, just to live, just to eat. That’s how bad it gets. It’s the dignity and the respect you don’t seem to get nowadays and that’s what really worries me. So I really hope the government keep this £20, because even with that Universal Credit is not enough to live on and something needs to be done.”

[1] https://nihrc.org/publication/detail/cumulative-impact-assessment-of-tax-and-social-security-reforms-in-northern