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13 October, 2020 Open access

Three-quarters of Citizens Advice debt clients receiving universal credit or working tax credit £20 uplift will be pushed into a ‘negative budget’ if it’s withdrawn

New report calls for increase to be made permanent and for ‘renewed government focus’ on people who are not able to cover basic living costs as the economic impacts of coronavirus continue to be felt

New analysis of Citizens Advice debt clients shows that three-quarters of those receiving the universal credit and working tax credit £20 a week uplift will be forced into negative budgets if it is removed.

In Life on less than zero, Citizens Advice examines the impact of the coronavirus (COVID-19) pandemic on the finances of people it has helped with debt advice services and warns that an increasing proportion of its clients cannot afford to make ends meet - with 40 per cent living on a negative budget (up from 37 per cent in 2019) where a debt adviser using the Standard Financial Statement has assessed that they cannot meet their basic living costs.

In addition, the analysis found that -

Highlighting also the additional impact of rising living costs - with annual energy costs increasing by £160 since 2019 and housing costs increasing by £460 - Citizens Advice notes the impossible position that debt clients with negative budgets face in managing these increased costs alongside negotiating repayment of average rent arrears of £910 and council tax arrears of £782.

As a result, Citizens Advice calls on the government to introduce further measures, in addition to the interventions it has so far made, to safeguard living standards and support the UK’s economic recovery, including by -

Commenting on the report, Chief Executive of Citizens Advice Gillian Guy said today -

‘The government has taken important steps to support people’s finances, keeping people in their homes and keeping the lights on during this pandemic. But there are still significant numbers of people who can’t even cover the basics and face deeper hardship.

The government must commit to keeping the current uplift and extending it to other benefits. This will be vital to keeping many families afloat now and in the months ahead.

The problem of people not able to cover the basics is not a new one, but it needs renewed focus from government. As the economic impacts of the crisis continue to be felt, this may be the sad reality for many more people.’

For more information, see Removing benefit uplift will leave people unable to cover basics, says Citizens Advice.