LISA NANDY MP: Universal Credit system does not work
In the run up to every Budget I receive hundreds of emails from constituents asking me to press the Chancellor to increase support for a wide range of causes.
With the devastating impact that the Coronavirus pandemic has had on individuals and the economy it has been no surprise that I have been contacted by more people than ever ahead of this week’s statement.
By far the issue I have been contacted about the most is the need for the Chancellor to scrap his planned cut to Universal Credit and Tax Credits in April. Universal Credit was designed to replace several ‘legacy benefits’, which include Child Tax Credits, Housing Benefit, Job Seekers Allowance and Employment Support Allowance.
Last April, as the country was hit by the first wave of the pandemic, the Government made the important step of increasing Universal Credit and Working Tax Credits by £20 per week - worth over £1,000 per year to a household.
The increase has been a lifeline for many people. As research from The Trussell Trust has shown, the rise has protected people who have lost income or their jobs from experiencing poverty during the crisis and has prevented tens of thousands of people from needing to seek help to feed themselves and their families.
People who have contacted me describe how the increase has been particularly essential for people living with disabilities. 75% of disabled people claiming Universal Credit since early 2020 say it has helped them in purchasing essentials.
The financial impact of the pandemic on disabled people has been particularly hard with raised shopping and utility bills and increased transport costs for attending essential appointments.
People living with long term conditions such as cancer who have contacted me have also felt a similar financial impact and have relied on the increase just to get by.
Parents have told me how the rise has helped them pay for kids’ meals and items for home schooling.
Yet, the All-Party Parliamentary Group on Poverty has warned that around 700,000 households, including over 800,000 children, would no longer be able to afford to meet their essential needs if the rise is withdrawn.
In Wigan alone a cut to Universal Credit would result in over 11,000 people taking a £1,040 a year hit to their finances. A cut would be a mistake for families, for the economy and for our ability to effectively recover from the pandemic. This £20 a week is not saved by families but spent in shops and businesses, stimulating the economy.
There is some indication that the Chancellor may be willing to consider extending the increase.
This would be the right thing to do but he should go even further.
The so called ‘legacy benefits’ (predominantly accessed by disabled people, carers or those with long term conditions) should also be uplifted in line with the increase in Universal Credit.
By not increasing these benefits too, over two million people have been left to face the financial impact of the pandemic without extra support.
The Government also needs to commit to ending the five-week wait for new claimants to receive Universal Credit and abolish the benefit cap and the two-child limit which is pushing thousands of families into debt.
The immediate priority must be to make sure that people get the support they need during the pandemic.
However, it has been clear from the early rollout of Universal Credit in places like Wigan that the system doesn’t work.
Many claimants find themselves worse off on Universal Credit than they were before and facing volatile monthly payments.
People are ending up destitute and in despair at the hands of a system that is supposed to help them.
In the longer-term Universal Credit should be scrapped and replaced by a new system which provides a proper social security safety net and has dignity and respect at its heart.