Summary of the All-Party Parliamentary Group for Universal Credit Tuesday 18 April 2023
APPG for Universal Credit Co-Chairs: Debbie Abrahams MP and Nigel Mills MP
Speakers: Dr. Charlie Berry (Shelter), Iain Porter (Joseph Rowntree Charitable Trust), Ieuan Ferrer (Trussell Trust)
Topic: Universal Credit and Cost-of-living Crisis
Introductory remarks by Debbie Abrahams MP
- Debbie Abrahams formally welcomed Nigel Mills MP, who co chairs the APPG. He also sits on the Work and Pensions Select Committee with Debbie Abrahams MP.
- Introduction of the speakers: Dr. Charlie Berry, Shelter; Ieuan Ferrer, Trussell Trust and Iain Porter, Joseph Rowntree Foundation (JRF).
Dr. Charlie Berry, Shelter
- The freeze to the Local Housing Allowance is causing homelessness amid the cost-of-living crisis and driving increasing homelessness.
- The benefit cap disproportionately penalises lone parent families and prevents domestic abuse survivors and former rough sleepers from moving out of emergency accommodation into longer-term homes.
- Local Housing Allowance has been frozen since 2020 – but private rents have risen by 8.4% in England since housing benefit last matched rent costs. Newly advertised rents have risen even faster so that just 1 in 50 homes advertised are affordable to people claiming housing benefits.
- The freeze undermines other measures the Government has brought in to deal with inflation and the rising cost of living, as shortfalls between rents and the allowance cut into a family’s budgets.
- Data from Citizens’ Advice shows that 53% of their private renting clients in receipt of benefits are in a negative budget, meaning that they have less coming in each month than they’re spending to cover rent and other essentials.
- 1 in 3 (1.8 million) private renters rely on housing benefit to pay their rent. More than half have a shortfall to their rent – on average costing them £151 a month.
- More than two in five (44%) of privately renting adults in England – equivalent to 3.6 million people – say rising living costs are making them more worried about becoming homeless.
- The Local Housing Allowance freeze is driving and prolonging homelessness, the latest available figures show that in the year to September the number of households made homeless from privately rented homes increased by 18%.
- Inadequate Local Housing Allowance rates mean that families get stuck in council-arranged temporary accommodation for longer and that they are more likely to be placed in the worst forms of temporary accommodation.
- In the last year there was a 91% increase in families with children being placed in B&Bs and a 112% increase in families living in B&Bs for longer than the statutory limit of 3 months.
- Discretionary housing payments, which are often cited by ministers as the answer for people affected by local housing authority shortfalls, have seen their funding cut to the lowest levels in 10 years despite clear evidence of councils running out of money even before the start of winter 2022.
- Local Housing Allowance urgently needs to be restored to cover at least the cheapest third of local homes and relinked to the real cost of renting for future years.
- A failure to invest in building truly affordable social housing, meaning low-income households must instead rely on local
housing allowance to remain in the expensive private rented sector. The bill for temporary accommodation has also grown by 61% in the last five years, to £1.6 billion.
Ieuan Ferrer, Trussell Trust
- The cost-of-living crisis was increased the usage of food banks. • The need seen this year has followed the gradual increase in the trend of food banks usage since records have been kept from 2017/18. The usage of food banks is not just related to the cost of-living crisis.
- From April 2022 to September 2022, food banks within the Trussell Trust network distributed 1.3 million parcels of food including 500,000 to children. This is the largest it has ever distributed.
- This represents a 33% increase in total compared to 2021/22. • Breaking down the use of food parcels in the United Kingdom, Wales had the largest increase of 38%, followed by Scotland 34%, England 33% and Northern Ireland 25%.
- Food banks have said this is not sustainable.
- A recent Which? survey said 15% of people have skipped meals compared to 10% the previous year.
- Food banks have changed their opening hours to allow working people to attend. 1 in 5 referred to food banks in 2022 were working people as they could not afford essentials.
- In the Trussell network of food bank, 6 in 10 referrals were on universal credit.
- The budget range of food has increased 25% compared to 14% for the premium brands.
- 15% of people referred to food banks faced universal credit reductions.
- In July 2022, households received the first cost-of-living payment, where we saw a reduction in the need for food parcels from 7,200 parcels a day to 5,500 parcels, a drop of nearly a quarter. • However, in August 2022, it went back to record levels.
- A survey of people receiving universal credit showed 70% of people had already spent the cost-of-living payment in less than a month of receiving it. Two thirds used this to buy food.
- The November cost of living payment shows a similar pattern, and figures will be published later.
- Based on a survey Trussell Trust commissioned in September 2022, 77% of people agreed that more action needs to be taken to help people.
- In the same survey, it showed that 80% of people agreed with the statement that everybody should be available to afford the essentials.
- The social security system is not achieving this because it does not consider how much things cost.
- This is why Trussell Trust and Joseph Rowntree Foundation have launched a campaign. This is based on the principle that the social security system should support people in buying the essentials which Iain will cover.
- Everybody should be able to afford the essentials, and no one should need to use a food bank.
Iain Porter, Joseph Rowntree Foundation
- The Joseph Rowntree Foundation has been tracking impact of the cost-of-living crisis on low-income households via our large nationally representative 6-monthly tracker surveys. These focus on households with incomes in bottom 40%. The 3rd wave was completed just before Christmas and the 4th wave will go into field research next month.
- There is a very worrying situation for low-income households. But within this, it’s been particularly bad for people on the very lowest incomes, especially households receiving universal credit.
- 90% of low-income households receiving universal credit went without at least one essential like food, a warm home, toiletries or showers.
- 77% experienced food insecurity in last 30 days; 43% couldn’t adequately heat homes.
- Almost three quarters are currently in arrears with at least one household bill or repayment.
- Universal credit is falling well short of playing its role as an adequate safety net.
- As Ieuan highlighted, this is an intensification of a longer-term trend of rising destitution and deep poverty, even before the cost of-living crisis and the pandemic.
- JRF’s destitution research showed 2.4m people experienced destitution in 2019, up 54% from 2017. JRF research consistently shows that inadequate social security support is a key factor.
- Today’s benefit levels are simply the result of a historical sequence of rate changes, in quite an arbitrary way, with rates never linked to any objective measure or set based on the cost of what households need.
- Without any real logic underpinning it, the basic rate of Universal Credit – its standard allowance – has been allowed to erode over time.
- It’s currently at its lowest level in real terms for nearly 40 years and its lowest ever level as a proportion of average earnings. • JRF’s new research takes a detailed look at the basic rate of universal credit – the standard allowance – and asks “is it enough to do its basic function?” That is, if a family needs support from universal credit, the standard allowance should, at a minimum, at least cover core essential bills – things like food, utilities, vital household items and travel – for the adults in a household. • Other elements of benefit system intended to cover other costs – rent and Charlie spoke very well about the shortfalls we’re seeing in housing support, council tax, additional costs associated with being disabled, or support for children – so these aren’t covered in this analysis.
- Draws on a range of sources, including ONS data on actual spending by low-income households, focus groups with the public (including some groups of universal credit claimants and public polling).
- It indicates that around at least £120 p/w is needed for a single adult and £200 for a couple to afford core essentials for the adults in a household.
- This really is a basic list of items, with conservative estimates of costs, and it demonstrates that universal credit’s standard allowance is clearly inadequate.
- Universal Credit’s basic rate will be at least £35 p/w below the cost of essentials for a single adult, and £66 below for a couple based on the essentials guarantee figure. The gap for under 25’s is even bigger.
- People often receive even less than these already inadequate headline rates because of various deductions, e.g. debt deductions, or benefit cap.
- For debt deductions, people lose up to 25% of standard allowance, mostly to repaying debts to government.
- JRF’s latest tracker survey found that 95% of people on universal credit are facing deductions and going without essentials, compared to 84% of people on universal credit not facing deductions.
- 45% of all households on UC have debt deductions taken. • The essentials guarantee would embed in the system the widely supported principle that, at a minimum, Universal Credit should enable people to at least afford essentials. This could be enshrined in legislation.
- The Essentials Guarantee wouldn’t specify exactly how the UK government should set benefit rates and rules.
- The Essentials Guarantee is a common-sense approach. • 72% of the public support the Essentials Guarantee at the highlighted indicative level; only 8% oppose.
- Labour, Liberal Democrat and SNP voters all show support around the 80% level; 62% of 2019 Conservative voters supporting the policy.
- Implementing the Essentials Guarantee would represent a significant and widely supported reform of social security, embedding for the first time a protected, minimum level of
support linked to a rational calculation of essential needs and costs.
Comments, questions and answer
Nigel Mills MP: Have you costed this?
Iain Porter: This process would be carried out by an independent process, but we have judged it to be £22bn. The principle of the policy is important, having a guarantee in the system. The cost could be phased in to institutionalise it. Now, it happens in an arbitrary manner. It is the lowest it has been in real terms in 40 years. This proposal supports ‘a line in the sand’ in guaranteeing essentials.
Nigel Mills MP: Are you in contact with other charities and campaign groups to support this?
Iain Porter: The big question of how benefits are set is widespread. However, the principle that there should be a minimum level has the support of frontline organisations and the public we’ve surveyed. We have partnered with Trussell Trust with this campaign and many organisations including those in the room, there is consensus for this.
Debbie Abrahams MP: Nigel and I sit on the Work and Pensions Select Committee and the terms of reference are currently being drawn up in terms of looking at the adequacy of benefits and its impact. It is important to get a broad coalition of support. It is also important to understand how it may be costed.
Nigel Mills MP: I think we can at the minimum look at a backbench debate on this in Westminster.
Iain Porter: We believe there is cross party consensus on this issue. There was also The Pensions Commission which looked at pensions on this matter in the early 2000’s, which received cross party support.
Alexandra Jones, Gingerbread: We are supportive of the essentials guarantee and echo the points made. We have seen an increase in calls about the cost-of-living crisis related to Local Housing Allowance, gaps of £600. Single parents do not know how they will fill this gap. A lot of
people are desperate about the housing situation and food insecurity. The child poverty statistics appear to have improved for single parents from 49% to 44% in the recent DWP statistics. This is likely due to the uplift from social security via the cost-of-living payment.
Jamie Thunder, Z2K: Z2K is an organisation which has a helpline and gives out grants. We happily support this campaign. We are increasingly seeing people who receive the maximum they are entitled to and still cannot make ends meet. People who receive disability benefits are using what they get to make ends meet on rent and food.
Alexandra Jones, Gingerbread: Someone called the helpline, who was working part time and studying for additional qualifications as she works in the early years sector. These qualifications will help her improve the level of salary she will receive. However, she was sanctioned because she missed a job search meeting due to handing in an assignment. We are worried about conditionality and sanctions.
Debbie Abrahams MP: We will be holding a session on sanctions later in the year.
The Co-Chairs agreed to propose a Westminster debate to discuss how the level of universal credit is determined.
Turn2us will follow up with the Co-Chairs, the Trussell Trust and JRF to co-ordinate this action.