Over 700,000 people in working or disabled households to be pulled into poverty by universal credit cuts

Embargoed until 00:01 Wednesday 17 February

Over 700,000 people in working or disabled households to be pulled into poverty by universal credit cuts

New Fabian Society research finds that the huge majority of people hit by the chancellor’s planned UC cuts are in working or disabled households:

• 95% of the people pulled into poverty by the planned cuts (720,000 people) are in a household where someone is working or disabled
• 87% of the planned cuts (£5.5bn per year) will hit working or disabled households.

• Half the cuts (£3.2bn) will fall on working households and 65% of all those pulled into poverty are in working families (490,000 people)

A Fabian Society research report (supported by the Standard Life Foundation) today reveals that reversing last April’s £20 per week increase in universal credit will overwhelmingly impact working families and disabled people.

In a new report Who Loses? the thinktank argues that the Chancellor’s planned cut “raises fundamental questions of justice” because the main long-term victims are working families and disabled people who are not expected to be job-hunting.

The analysis of the impact of the cuts over the coming few years shows those hit will lose around £1,000 annually, even though in most cases there is no expectation that they should be seeking work or trying to increase their earnings. Only 13% of the savings will come from non-working, non-disabled households.

In the report, the Fabian Society shows how the cut to universal credit will reduce the living standards of households in many different circumstances. Households with a disabled adult will be hit by 57% of the cuts (£3.7bn per year); families with children will be hit by half the cuts (£3.2bn per year); and households where someone is a carer will be hit by 12 per cent (£700m per year).

Commenting, Andrew Harrop, General Secretary of the Fabian Society, said:

“If ministers cut universal credit this April, they will overwhelmingly punish working families and disabled people. People in these groups have shown huge resilience during the pandemic and have done nothing wrong to deserve this.

“The chancellor’s planned cut will strip £1,000 per year from six million families and plunge three quarters of a million people into poverty. Some politicians like to pretend that social security is just for the workshy. But the reality is that millions of working households need benefits and tax credits to make ends meet, as do disabled people who are out of work through no fault of their own.

“If ministers are considering a few months’ temporary extension to the universal credit uplift, that just isn’t good enough. The 2020 benefit increase must be placed on a permanent footing.”

Mubin Haq, Chief Executive of the Standard Life Foundation, added:

“Last year’s uplift to universal credit has been an essential lifeline for millions of families with no or low earnings through 2020. Even with the £20 increase, many are struggling. Without it, more will face hardship. Our safety net needs strengthening not further erosion.

“If the chancellor reverses the uplift in this March’s budget, the cut will come into force just as the Government’s main pandemic support schemes come to an end. It will be a blow to many who rely on it to make ends meet.”

Ends

Editor’s Notes:

1. Who loses? is the second output of Social Security Solutions, a Fabian Society research project supported by a grant from the Standard Life Foundation. The project aims to consider whether considering the Covid-19 emergency a new consensus on social security can emerge, both broadly within society and across the political spectrum. The focus of the project is social security for working-age adults and children across Great Britain. A series of further reports will be released in the coming months.
2. The analysis uses the Landman Economics Tax-Transfer Model (TTM) to project the impact of the cuts once universal credit is fully rolled-out. It assumes employment levels have returned to the levels seen before the pandemic. TTM is a micro-simulation model of the tax-benefit system that uses data from the 2018/19 Family Resources Survey to analyse the impact of changes on household incomes and the public finances.
3. Standard Life Foundation funds work to tackle financial problems and improve living standards for people on low-to-middle incomes in the UK. It is an independent charitable foundation registered in Scotland.
4. Report author Andrew Harrop (Fabian Society general secretary) is available for interview