Devolved nations call for Universal Credit cut U-turn

Social Justice Secretary Shona Robison

The Scottish, Welsh and Northern Irish governments have joined forces to write to the Secretary of State for Work and Pensions repeating their urgent call for the UK Government to reverse its plans to cut the £20 increase to Universal Credit introduced during the pandemic.

The joint letter to Therese Coffey from Social Justice Secretary Shona Robison, Welsh Social Justice Minister Jane Hutt and the Northern Ireland’s Communities Minister Deirdre Hargey points out that the UK Government’s plans will cost people over £1,000 a year “at time when they need financial support the most.”

The letter states:

 “This planned withdrawal will be the biggest overnight reduction to a basic rate of social security since the modern welfare state began, more than 70 years ago. It could cut social security payments in Scotland alone by over £460 million per year by 2023/24.

“We are concerned about the potential impact that reducing Universal Credit will have on child poverty, poverty levels and the financial health and wellbeing of people. We urge the UK Government to reverse the decision without delay in order to avoid causing further anxiety.” 

The full text of the letter can be read below:

Dear Thérèse

Further to our joint correspondence in November 2020, we are writing to express the grave concerns of all three devolved administrations regarding your Department’s upcoming plans to withdraw support to the poorest in our society by allowing the £20-per-week increase to Universal Credit and Working Tax Credits to expire. As you will be aware, this planned reduction means the biggest overnight reduction to a basic rate of social security since the modern welfare state began, more than 70 years ago. Failing to maintain the recent uplift to Universal Credit will increase hardship and poverty for people who are already struggling. To support the social and economic recovery, particularly as we ease out of the public health emergency, we urge you to reverse this decision and to strengthen the support offered by Universal Credit, instead of weakening it.

You have publicly stated that your Department’s policy not to further extend or make permanent the £20 per week increase to Universal Credit and Working Tax Credits is to encourage people into work. However, the statistics from your Department show that of the 6 million people on Universal Credit, 2.2 million are already working and 1.6 million are not required to work due to health and caring responsibilities that prevent them from seeking employment. We query, therefore, how failing to maintain the uplift to Universal Credit for households in these situations encourages people into work, and are concerned about the need to ensure that it provides them with adequate financial support that takes into account their personal circumstances.

We are concerned about the potential impact that reducing Universal Credit will have on child poverty, poverty levels and the financial health and well-being of people. If an impact assessment has been carried out, we request the sharing of data and impact assessments behind the planned decision to withdraw this support and to explain how it intends to support families who are pushed into poverty as a result of this decision.

The Children’s Commissioners for the devolved nations, the Joseph Rowntree Foundation, Citizens Advice and the social security committees are just a few of the groups that have raised serious concerns that those on the lowest incomes, and families with children will be the hardest hit if the increase is not extended or made permanent.

Analysis conducted by the Scottish Government in June 2021 shows that if your Department follows through on the plan to withdraw the £20-per-week uplift to Universal Credit in October it could cut social security payments in Scotland alone by over £460 million per year by 2023/24. In the north of Ireland based on households in receipt of Universal Credit as at 28 February 2021, the loss of the £20-per-week uplift would result in a reduction to Universal Credit of £55.5 million for the remainder of this financial year. In June 2021, there were around 280,940 people on Universal Credit in Wales, a net increase of around 125,500 people since March 2020.  Ceasing their additional Universal Credit payment will have a devastating effect on these people with many losing over £1,000 a year at a time when they need financial support the most. In addition, the impact will be heightened by the premature end of the furlough scheme and Ofgem’s recent confirmation that the price cap for default domestic energy deals is to  be raised, resulting in the average customer’s bill increasing by £139. 

The Resolution Foundation conducted analysis indicating that this reduction in financial support to the most vulnerable in our communities will help push 730,000 children into poverty. There could also be a knock on impact to debt levels, rent arrears and homelessness.

As highlighted above, the uncertainties resulting from the global pandemic continue and it is essential that measures are put in place to provide adequate support. Therefore, we urge you to reverse the decision to end the £20-per-week uplift to Universal Credit and Working Tax Credits, agree to make them permanent and to extend the suspension of the Minimum Income Floor for a further twelve months. We ask you to announce this without delay in order to avoid causing further anxiety. 

We look forward to hearing from you shortly.

A copy of this letter is being sent to the Chancellor of the Exchequer and relevant Secretary of States for the devolved nations.

Yours sincerely

Shona Robison

Cabinet Secretary for Social Justice, Housing and Local Government

Jane Hutt

Minister for Social Justice

Deirdre Hargey Minister for Communities

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