By Emma McClelland and Olivia Vicol - 04 October 2022
The Prime Minister's reluctance to rule out real-terms benefits cuts has troubled anti-poverty organisations, including our own. Failing to uprate benefits in line with the cost of living will push thousands of people into financial turmoil.
There are many places governments can look to make cost savings. The homes of society's least well off are not usually the first port of call. But this government seems intent on shaking change from the pockets of Britain's most vulnerable. The Prime Minister has committed to raising pensions, but has been notably evasive about whether benefits will be uprated in line with inflation - as promised by her predecessor, as reiterated by ex-Chancellor Rishi Sunak as early as May, and indeed as practised by every government since the mid-1980s.
In this blog post, we look at the government's approach to freezing benefits, and why it needs to change course now.
Reducing benefits will NOT get more people into work.
During last month's financial statement, Chancellor Kwasi Kwarteng claimed that "We will make work pay by reducing people's benefits if they don't fulfil their job search commitments… And we'll ask around 120,000 more people on Universal Credit to take active steps to seek more and better paid work, or face having their benefits reduced."
It seems the Chancellor is operating under the assumption that benefits claimants are not working (or not working hard enough). As a recent thought piece in The Independent illustrates, people can be working 40-hour weeks on the minimum wage and not have enough to live. Indeed, 40% of Universal Credit claimants are in work. But often the pay is so low or the shifts so irregular that they are forced to rely on social welfare. Surely, the government's focus should be on reducing low-paid, precarious work, not heaping pressure onto the shoulders of struggling workers.
Benefits claimants are NOT always able to work
For parents, the lifeline that benefits such as Universal Credit provide is essential because of inflexible working practices and expensive childcare. The UK has the highest childcare costs in the developed world, according to the OECD. Childcare costs for low income couples, where one parent earns minimum wage, and the other an estimated 24,000/year, take up a whole 40% of the family's monthly income. Every week our advisers hear from women who have resigned themselves to domestic responsibilities, simply because paying for childcare is more expensive than what they would earn. So refusing to uprate benefits in line with inflation unfairly affects women and children.
In addition, Universal Credit is not a level playing field to begin with. As a charity, we regularly hear from claimants, particularly EU migrants, who have had their payments suspended suddenly and without explanation. They often resort to desperate measures, including sharing a room with their parents, relying on foodbanks, or taking out loans. The DWP Minister for Welfare Delivery, David Rutley, argued that providing reasons for suspensions would show fraudsters how to game the system, highlighting once again the suspicion directed towards those in need of social welfare.
This government must provide clarity, NOT uncertainty
We hope that, in the coming days, Liz Truss and her government alleviate the uncertainty many people will be feeling and agree to raise benefits in line with inflation. From our point of view, this is not a high bar, nor is it an effective plan for the lowest-paid in society. It is time this demographic is treated fairly and given the support they need to endure one of the toughest periods in recent history.
If you or anyone you know is struggling with the cost of living, we have developed a guide that outlines sources of support, which you can find here. If you're uncertain about your eligibility for Universal Credit, you might find our eligibility tool useful.
For further information and support, don't hesitate to get in touch with our team. We're here to help.
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