Last year, the Government increased the payment of Universal Credit by £20 a week to help those struggling financially during the onset of the pandemic. This raise was previously set to end on March 31, 2021 but was pushed back due to public pressure. However in his Budget announcement earlier this year, Chancellor Rishi Sunak confirmed the uplift would last until the end of September.
One of the many Britons who is set to be hit hardest by the cut to Universal Credit is Stacey, a sales executive from Bristol.
After the death of her partner, the 35-year old single mum had to claim Universal Credit to help her meet the basic costs of bringing up a young family on her own.
However in light of this month’s cut, Stacey is set to face further challenges in supporting her children going forward.
“I’m really going to struggle if they cut the £20 weekly uplift as prices for everything have gone up so much over the last year,” she said.
“I’m not sure how I’m going to juggle the finances around even more, so I don’t really want to think about it now – it’s just too stressful.”
On top of this, Stacey believes the current payment for Universal Credit is not enough for working families like herself to survive on, especially when it comes to looking after children.
She added: “School uniforms, school trips, surprise bills – everything is a constant worry – there’s not even the tiniest safety net – every day I stress about which pot I pull out money from. Do I turn the heating off or do I go without shopping for the week?”
Therese Coffey, the Work and Pensions Secretary, outlined the Government’s plans when she spoke to MPs on the Work and Pensions Committee on July 7.
She said: “Ahead of October we will start communicating with the current claimants who receive the £20 to make them aware that it will be phased out and they will start to see an adjustment in their payments.”
The cut is scheduled to be in law for October 6, 2021, which coincides with the last day of the Conservative Party Conference.
Despite the misconception that those Universal Credit do not work, Action for Children’s research found that working families will be hit the hardest by the change, including those who are carers, shop-workers and hairdressers.
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Commissioning research from the Child Poverty Action Group, the charity addressed how the £20 uplift Universal Credit has benefitted working families since its introduction last year.
Specifically, Action For Children is of the opinion that the uplift has helped limit damage caused by previous cuts to benefits, which have been carried out over the last ten years.
According to the cut, household incomes will fall by £1,040 a year once the cut is implemented later this month.
When this is combined with the Government’s previous cut to other benefits, working families are set to lose much more in the long-term.
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Action for Children analysed the impact the Universal Credit cut will have on a typical sole-earner family with two children in a selection of common low- to middle-income jobs.
Hairdressers were found to be the worst-off and are set to lose an average of £1,982 a year after the cut.
This group was followed by pharmacy assistants, who will have a £1,946 average annual loss and shop-workers, who will lose £1,843 a year.
According to the charity’s data, families have still been “out of pocket” by an average of £750 a year despite the Universal Credit rise due to previous cuts.
Once the proposed cut goes ahead, figures suggest the average annual benefit income loss for these workers will rise by 140 percent, to nearly £1,800 a year.
According to statistics from the Department of Work and Pensions (DWP), around 3.4million children are living in households that receive Universal Credit payments.
Imran Hussain, Director of policy and campaigns at Action for Children, explained why the cut would hurt the country’s most vulnerable households and workers if it were to continue to go ahead.
He said: “We welcome the Government’s levelling-up agenda, but you can’t level up the country by pushing down the living standards of some of the hardest working families in the country.
“Too many childhoods are overshadowed by poverty and hardship, and the pandemic is making things worse.
“Our analysis shows the huge squeeze on incomes millions of working families will face at the end of this month.
“We’re talking about hairdressers, shop-workers and carers – not big earners but people who are proud to work and do everything they can to provide for their children.
“The Government needs to rethink its plan to cut Universal Credit – it’s a recipe for disaster for struggling families and clashes with the end of the furlough scheme when more parents will be at risk of losing their jobs, the extra costs of the school term and a rise in energy bills as we head into the colder months.”
Claimants of Universal Credit should contact their JobCentre or their work coach for advice on how these changes could affect them.