Economy

Why we need to keep the £20 Universal Credit uplift

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Over the coming months, Backbench will be partnering with Torrin Wilkins, Director of Centre Think Tank for a series of comment pieces. In his column, Torrin will explore prominent policy issues – some of them related to the latest news and others related to his longer-term projects. We’d love for Backbench readers and commentators to respond to Torrin’s policy analysis and ideas, so if you would like to contribute a response, please email editor@bbench.co.uk.  

Please note that all the views expressed in Torrin’s articles are those of Torrin himself and do not necessarily represent the standpoint of Backbench. 

As a temporary measure during the pandemic the government decided to increase Universal Credit payments by £20-per-week. With the pandemic hitting the economy it’s been a necessary measure to ensure those who have lost their jobs are supported properly, especially considering so many people were excluded from the other support schemes. Yet this measure is temporary, and the Conservatives want to scrap it now lockdown has been lifted.

This debate is not in a vacuum, however. The backdrop is years of discussion and argument around the benefits system and how we manage it properly it. There are debates around what form welfare should take with options ranging from giving everyone a set amount of money with no questions asked, a Universal Basic Income, or clamping down on those fraudulent claims. These two sides of the argument have been around long before COVID-19 and that helps to explain where we are now.

So, the question is why should we keep the £20 uplift? In part it’s because whilst lockdown is over, the pandemic and the need to support people isn’t. GDP is still below where it was before the last quarter for 2019 and the number of people on payroll is still below where it was in March 2020. You also still have those that fell through furlough and the self-employed income support scheme who are struggling with their businesses or finding new employment.

The £20 per week uplift will help these people but there is also a wider issue at stake: how much we pay to those who are on Universal Credit. The current system means that without any extra top-ups someone who is single and over 25 will be on £3898.08 and if they are single and under 25, they would be on £3087.96. For a couple there is a payment for both people with those under 25 receiving £2447.16 and those over 25 receiving £6118.92.

Such a difference may seen small but when the Joseph Rowntree Foundation puts a minimum income at “A single person needs to earn £20,400 a year to reach a minimum acceptable standard of living in 2021…” which is above even the minimum wage within the UK so it’s clear that this isn’t something people can live on.

That’s where I think the argument around the £20 increase is simple. How much we give to those who are on Universal Credit and what criteria we should have for the system are different arguments. Whether you want to reform the benefits system or not and whatever the criteria you think the benefits system needs, it doesn’t matter. That argument is a separate one and, as I said to begin with, one that we have been having for years. The argument here is that we have our current benefits system and no matter how we intend to reform it we also need to deal with the system as it is now.

There are undoubtedly people on this system that need support and haven’t been given enough money to support themselves properly. We can either choose to support them or to once again reduce their support. The arguments are about who deserves to be on Universal Credit can then go on separately and I will be arguing that we need a simpler system. For now, however, this is about the people who need help and have been hit by the pandemic and in many cases years of not being supported properly.

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