Working Tax Credit And Universal Credit Cut
This week the NRLA, along with over 100 other organisations across the UK, joined with the Joseph Rowntree Foundation to issue the following letter to the Prime Minister urging the government to not proceed with the planned £20-a-week cut to Universal Credit and Working Tax Credit:
Dear Prime Minister,
We are writing to collectively urge you not to go ahead with the planned £20-a-week cut to Universal Credit and Working Tax Credit at the beginning of October.
Many of us provide frontline support in communities up and down our country and see first-hand the importance of our social security system. Life is full of crises that we cannot plan for, such as job loss or illness, and periods of lower earnings or caring responsibilities. We all need the security and stability of a strong lifeline, not just during a national crisis, but every day.
Imposing what is effectively the biggest overnight cut to the basic rate of social security since World War II will pile unnecessary financial pressure on around 5.5 million families, both in and out of work.
At the start of the pandemic, the Chancellor rightly said that he was introducing the £20 increase to “strengthen the safety net” – a tacit admission that a decade of cuts and freezes had left it unfit to provide the support families need. We all strongly supported this crucial improvement in support.
We are at risk of repeating the same mistakes that were made after the last economic crisis, where our country’s recovery was too often not felt by people on the lowest incomes. The erosion of social security support was one of the main drivers of the rise in in-work and child poverty, and contributed to a soaring need for food banks, rising debt and worsening health inequalities.
We deeply regret that the Department for Work & Pensions has not published its assessment on the impact of cutting Universal Credit and Working Tax Credit. However, the latest independent analysis from the Joseph Rowntree Foundation (JRF) shows it risks plunging 500,000 people into poverty, including 200,000 children. It will take the main rate of out of work support down to its lowest levels in real terms since around 1990.
This is not a question of having to choose between a recovery based on getting people into jobs or investing in social security, in fact most families impacted by this cut to Universal Credit and Working Tax Credit are already in work. The reality of the UK labour market means that to improve living standards, we need to both improve job quality and strengthen the social security system. We also must never lose sight of the need to provide adequate support to families who are not able to work so they can meet their needs with dignity.
Six former Conservative Work & Pensions Secretaries believe previous cuts to social security spending went too far and oppose this cut, and your own Conservative MPs are warning that it will have deep and far-reaching effects in their constituencies.
Recent analysis from JRF shows that 413 parliamentary constituencies across Great Britain will see over a third of working-age families with children hit by the planned cut to Universal Credit and Working Tax Credit on 6 October 2021. Of these 413 constituencies, 191 are Conservative – 53 of which were newly won at the last general election or in a subsequent by-election.
This looming cut would fundamentally undermine the Government’s mission to level up. Citizens Advice has identified that people are one and a half times more likely to claim Universal Credit in places the Government has prioritised for levelling up investment. They also found for every £1 that could be invested from the Levelling Up Fund in England, £1.80 would be taken from these local economies if the Government presses ahead.
Furthermore, it is unacceptable that legacy benefits, such as Employment and Support Allowance, Jobseeker’s Allowance and Income Support, continue to be excluded from this crucial improvement in support, mostly impacting people who are sick, disabled or carers.
We are rapidly approaching a national crossroads which will reveal the true depth of the Government’s commitment to improving the lives of families on the lowest incomes.
We all want a social security system that supports families to escape poverty rather than pulling them deeper into it. However, this cut risks causing immense, immediate, and avoidable hardship. A strong social security system is a crucial first step to building back better. We strongly urge you to make the right decision.